Sept 28 (IFR) - Investor hunger for returns in the current
ultra low-rate environment is pushing asset-backed
securitization (ABS) yields to new lows.
Beacon Container Finance set a fresh record this week for
the lowest yield paid for the senior tranche of an ABS deal
backed by container lease receivables.
The five-year Single A rated class A was priced at a yield
of 3.75%, the lowest ever, according to bankers close to the
deal. The coupon was set at 3.72% and the dollar price was
The transaction was increased in size from an initial amount
of US$200m, reflecting increased acceptance of a product that
had little traction with investors until last year.
"Some of the reasons for the increased investor interest are
the yield pickup and the fact there is more liquidity in the
asset class given the increased issuance of container ABS this
year with seven different marine container companies issuing in
the ABS market in 2012," said Jay Steiner, managing director and
head of banking and origination, structured credit for the
Americas at Deutsche Bank.
"So far this year, container lease-backed securitization
deals have totaled about US$2.4bn versus about US$1.5bn a year
earlier," he said.
Deutsche Bank (structuring lead) and Wells Fargo were joint
leads on the US$250m 144a Beacon Container Finance 2012-1. The
transaction represents Beacon Container Finance, LLC's inaugural
securitization. It's also the first time that Kroll Bond Ratings
has rated a deal in the ABS container space.
S&P also rated the deal and both agencies assigned a Single
A rating to the five-year tranche.
According to Kroll, the structural characteristics are
similar to previous container leasing securitizations. These
include a 10-year expected maturity, a 15-year legal final
maturity, and certain performance tests that if breached could
trigger a rapid amortization or result in the replacement of the
The strong response to container lease-backed ABS in the
primary market has been supported by a rise in secondary market
activity in the product, said Steiner.
"These deals are also now finding interest from investors
who have not previously purchased container ABS, notably money
managers, showing the growing acceptance of the asset class," he
"Investors are comfortable buying container lease-backed ABS
because the pre-credit crisis transactions continued to perform
as expected during the recent economic downturn and the
underlying portfolios are diversified across a number of
About two dozen investors took part in the deal, a
significant increase from earlier deals that were driven by
large orders from one or two investors.