Verizon Launches Primary Trust Format for Upcoming Device Pay ABS
Verizon’s first mobile device finance securitization in 2021 also marks the start of a new master trust shelf that the operator plans to use for a revolving pool of device payment plan contracts.
Verizon Master Trust, Series 2021-1 is a $ 962.2 million transaction that represents the 14eterm securitization to date, including its eighth publicly traded transaction. But this is the first round of the new Verizon Master Trust that will periodically issue notes that, like bank credit card ABS structures, will be designated for specific groups of accounts.
Previously, Verizon securitizations were backed by discrete pools of consumer device contracts.
The Series 2021-1 guarantee pool will include nearly 3.6 million accounts receivable with an aggregate principal balance of $ 2.53 billion. The accounts have an average principal balance of $ 707.10, with an average monthly payment of $ 31.80. The contracts have remaining payment periods of 23 months on average.
The weighted average FICO of borrowers is 706.
Moody’s Investors Service, Fitch Ratings and S&P Global Ratings have assigned preliminary triple A ratings to $ 850 million of Class A bonds, which will carry an expected coupon of 0.86%. The ratings will be supported by a 22% credit enhancement, including the subordination of a $ 67.2 million Class B tranche (rated Aa1 by Moody’s and AA + by S&P) and a Class C tranche of $ 45.7 million (rated A1 / A +).
The deal structure allows for an initial three-year renewal phase of up to three years, during which the collections can be used to purchase additional accounts in the series.
Verizon intends to issue further group-backed series from the trust in which each group’s pools can be distinguished by various characteristics, according to S&P. Segmentation could potentially involve discount rates, eligibility criteria, concentration limits, interest rates, required overcollateralisation percentages, revolving periods, amortization events, early repayment dates or final due dates, according to the S&P report.