Vendor financier DLL closed its first asset-backed securitization deal of 2023 on Feb. 2 — an $850 million transaction backed by loans and leases secured by agricultural, golf course and turf equipment.
The pool consists of: 73.6 % loans and 24.6% leases for agriculture equipment consisting of tractors, hay and forage, and processing and packaging equipment, along with golf and turf equipment consisting of golf cars, utility vehicles, mowing and transport equipment, according to a Moody’s Financial Service’s presale report. There are 35,110 contracts in the pool, with a weighted average remaining term of 56 months.
Spreads have widened when compared with DLL’s most recent transaction with similar collateral in 2021. Spreads on the first AAA tranche in its 2023 deal clocked in at 75 basis points (bps) over the I-Curve, compared with 16 bps over the Eurodollar Synthetic Forward Curve in its 2021 deal, according to Finsight, which monitors securities.
In fact, spreads have just started tightening in the agriculture and construction equipment ABS market over the last two months — hitting 17 bps over swaps the week ending Feb. 2 — after gapping out to 56 bps during the first week of December, according to JPMorgan Securities. By comparison, spreads were 3 bps over swaps when DLL closed its ABS deal in 2021.
Still, the global lender was able to attract “quite a few new investors” to its transaction, DLL U.S. Treasurer Chris Morris said in a Feb. 2 statement.
Monthly payments dominate collateral pool
The collateral pool of the deal is composed of 82.9% monthly-pay contracts, which is substantially higher than other agricultural equipment lenders like CNH and John Deere, whose monthly-pay contracts typically come in below 33%, according to a Moody’s presale report. Yearly, variable, semiannual and quarterly contracts all make up the remaining 17.3% of the pool.
Loans and leases originated in Texas make up the largest percentage of the pool at 8.4%, with New York and Florida following at 6.5% and 5.6%, respectively, according to the presale report.
New equipment loans and leases represent 91.4% of the pool. Contracts held a weighted average APR of 3.8%, according to the report, and the weighted average APR increased 30 bps compared with its 2021 transaction.

Portfolio performance holds steady
DLL’s 31-to-60 days delinquency rate for the six months ended Sept. 30, 2022, ticked up 10 bps compared with year-end 2021 to 0.75%, according to the presale. DLL’s total delinquency rate — including delinquencies up to 150-plus days, as a percentage of net investment for the six months ended Sept. 30 — was 1.38%, up 2 bps compared with year-end 2021.
Net loss as a percentage of the average managed portfolio balance was 0.12% as of June 30, according to the report.
DLL, a subsidiary of the Netherlands-based Rabobank Group, had a managed portfolio of $42.3 billion in 2021, according to DLL’s 2021 annual report.