Kubota Prepares $648.4 Million Equipment Loan ABS

Kubota Credit Owner Trust, 2022-2, is gearing up to hit the market with $648.4 million in asset-backed notes secured by retail installment loans on new equipment.

Agricultural, construction and turf equipment account for pool concentrations of 50.5%, 39.6% and 9.7%, respectively. Fitch Ratings, which plans to assign ratings, says the composition of the pool is generally consistent with the platform’s history, but the 2022-2 deal has the lowest agricultural concentration on the platform. nowadays.

The concentration will limit diversification, even though historical losses in this asset class have been small, the rating agency said. Fitch said that beginning with deal 2022-1, it observed a move toward greater concentration in construction and turf equipment.

Kubota Credit Owner Trust, 2022-2, continues the downward credit enhancement trend that spread in 2022-1 and 2021-2 deals, but was lower than deals issued since 2020. Firm credit enhancement for Class A ticket totals 4.15% for the deal, consistent with 2022-1 and 2021-2, which was slightly lower, at around 4.0%, Fitch said.

Mitsubishi UFG Securities America is the lead underwriter of the deal, which Kubota Credit will sponsor and insure.

About 30,042 contracts that pay on a monthly basis are in the guarantee pool, with contract balances averaging around $26,212. On a weighted average (WA) basis, the contracts have an annual percentage rate of 0.15%, a FICO score of 736 and an initial term of 58.6%, according to Fitch.

The program has a very low history of delinquencies, foreclosures and net losses, which peaked in 2009 at 1.26%, 1.15% and 0.70%, respectively, due to the weak economic environment in the time. As of March 31, delinquencies, repossessions and net losses were 0.59%, 0.08% and 0.10%, respectively.

Fitch plans to assign “F1+” ratings to the $132 million notes, A-1 and “AAA” ratings to the other three categories of notes. The bonds also have staggered final legal maturity dates, A-1, A-2, A-3 and A-4 maturing in July 2023, June 2025, December 2026 and June 2028, respectively.

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