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Hewlett-Packard Financial Services announced a $895.2 million loan backed by proceeds from fixed-rate operating leases, finance leases, and loans financing other assets, including business-critical technology equipment and software. We are preparing to become a sponsor of dollar securitized bonds.
Moody’s Investors Service noted positive features of the transaction, including that the collateral pool is comprised of high-quality assets and an experienced servicer. In terms of asset quality, contracts with large institutional debtors account for approximately 88% of the discount pool balance. Also, contract terms are relatively low. Contracts in the collateral pool have an average remaining maturity of 38 months, but contracts with 35 months or less to maturity account for 51.5% of the discount pool balance, Moody’s said.
BofA Securities is the lead manager for the transaction, which is expected to close on January 31, 2024.
According to Moody’s and S&P Global Ratings, HPEFS Equipment Trust 2024-1 will issue debt through six classes of A, B, C and D bonds and senior substructures. According to both rating agencies, the final statutory maturity date for the top tranche, A1, is January 21, 2025, and the statutory final maturity date for tranches A2 to D is May 20, 2031. The rating agency said all notes have been revised.
Moody’s expects to assign a P1 rating to the A1 bond. Aaa tp is the tranche from A2 to B. Aa1 is a class C note and A2 is a class D note. S&P assigns an A1+ rating to the A1 tranche. AAA on A2 and A3 notes. From AA to Class B tranche. A corresponds to class C notes and BBB corresponds to class D notes.
Credit on this note is enhanced by being funded at closing by a cash reserve account equal to 1.00% of the original discount commitment balance and an annual excess spread amounting to 1.76%.
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