Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to the Series 2020-3 Class A and Class B Notes issued by CLI Funding VI LLC (the "Issuer"), a container leasing securitization. The Issuer is a special purpose entity and wholly owned subsidiary of Container Leasing International, LLC ("SeaCube") and has been structured to issue multiple series of notes. The Issuer currently has three series of notes outstanding, Series 2019-1, Series 2020-1, and Series 2020‑2.
Once the Series 2020-3 is issued, the securitization will be collateralized by a portfolio of 394,052 containers, with a net book value (NBV) of approximately $1,718 million and their respective leases. The fleet is comprised of approximately 24% refrigerated units ("reefers"), 73% dry units and 3% special units, such as Gensets. As reefers cost approximately $15,000 versus approximately $1,900 for standard dry container boxes, the NBV percentage of the portfolio represented by reefers is 63% and the proportion of dry units is 32%. Approximately 63% of the collateral pool by NBV is on long-term lease with an average remaining term of 4.45 years (53 months). Approximately 31% of the collateral pool by NBV is on finance lease and 5% is on master lease. Less than 1% of the collateral pool by NBV is off-lease. The containers are relatively young with a weighted average age of 4.04 years.
In conjunction with the issuance of the Series 2020-3 Notes, KBRA anticipates affirming the ratings on the Issuer’s outstanding Series 2019-1 Notes, Series 2020-1, and Series 2020-2 Notes at transaction close. The affirmation will reflect both the collateral performance, which is expected to be in line with the respective KBRA rating scenarios, and the expectation that the classes will continue to pass their respective rating level stresses with the addition of the Series 2020-3 Notes.
All series feature the same amortization structures. After interest is paid sequentially to both classes, principal is paid sequentially based on a minimum schedule (fifteen-year amortization), followed by scheduled principal (ten-year amortization) and any supplemental principal. Supplemental principal is paid when the outstanding principal balance of a respective class is greater than its asset base. The series asset base is calculated by multiplying the aggregate asset value of the containers by the advance rate and then by the series asset allocation. All series also include early amortization events whereby the senior class receives all funds after interest is paid on both classes. Series specific early amortization events include series specific events of default, if an interest coverage ratio is less than 2.0x for four consecutive months, or if the weighted average age of the collateral pool exceeds 9 years.
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the U.S. Information Disclosure Form located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA.
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John Lampasona, Director (Lead Analyst)
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Zara Shirazi, Senior Director
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Michael Lepri, Associate Director
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Rosemary Kelley, Senior Managing Director (Rating Committee Chair)
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Ted Burbage, Managing Director
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