Newton Commercial Finance, a joint venture between Apple Bank and Eagle Point Credit Management, is holding preliminary discussions with investors for a $180 million bond transaction. Approximately 15% of the underlying collateral pool is comprised of loans tied to artificial intelligence chips and graphics processing units. In addition to high-tech computing hardware, the proposed portfolio contains significant allocations of traditional equipment debt, including marine assets and fixed-wing aircraft. Ratings on the transaction from Morningstar DBRS are projected to span from AAA down to the BB tier.
Key points
Credit ratings for the planned asset-backed debt offering are anticipated to range from A…: Credit ratings for the planned asset-backed debt offering are anticipated to range from AAA down to the BB tier.
The transaction represents a growing broader market trend of structuring equipment loans…: The transaction represents a growing broader market trend of structuring equipment loans for artificial intelligence chips into securitizations.
Recent debt packages from lenders such as Stonebriar Commercial Finance and Wingspire Equ…: Recent debt packages from lenders such as Stonebriar Commercial Finance and Wingspire Equipment Finance also carried 15% to 20% exposure to graphics processing units.
Sources checked by our analysis pipeline: 1
(Bloomberg) -- Newton Commercial Finance, a joint venture between Apple Bank and Eagle Point Credit Management, is in early talks with investors about a potential $180 million bond offering partly backed by artificial intelligence chip loans.
The asset-backed securities are backed by equipment loans and leases, according to people with knowledge of the matter. Loans tied to AI chips, including graphic processing units or GPUs, make up about 15% of the collateral pool, the people said, asking not to be identified because they’re not authorized to speak publicly.
Plans and details aren’t yet final and may change, the people added. A representative for Newton Commercial Finance declined to comment.
The ABS deal would be the latest in a series of equipment loan and lease ABS that include exposure to chips. Other ABS equipment loan and lease deals in recent months from Stonebriar Commercial Finance and Wingspire Equipment Finance also included GPU exposure.
Stonebriar last month sold an $869 million ABS offering with GPU loans accounting for roughly 15% of the collateral, while GPU loans made up about 20% of the…
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