Monday, August 6, 2012

$250 million asset-backed container lease indicates new funding trend

SeaCo’s $250 million shipping container-lease is an asset-backed debt, a funding departure from the typical acquisition finance method of bank loans and bonds.

SeaCo’s transaction, sold to the market by Deutsche Bank, Bank of America Merrill Lynch, and Wells Fargo, points to a growing trend in the industry.

China’s HNA group acquired container-lease company GE SeaCo from General Electric in December. HNA paid $1.05 billion a share for GE SeaCo, the fifth-largest intermodal container lessor in the world. The financing was syndicated to a group of 12 banks, which meant they all shared the risk.

This week’s asset-backed market offering, secured by the lease payments on a portfolio of shipping containers, is the first “term ABS deal,” lowering and replacing the syndicated securitization funding.

"This transaction almost has the look of a leveraged finance transaction, but it's a true non-recourse offering repaid by the cashflow of the containers," said a senior ABS banker to Reuters

For more of the Reuters story: reuters.com

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