A revolving pool of payments on mobile devices, which Cellco Partnership originated, will provide collateral for $500 million in asset-backed securities (ABS), to be issued through the Verizon Master Trust.
The series 2025-9 notes will come to market through four tranches of class A, B and C notes, and is expected to close on November 25, according to Moody’s Ratings. All the notes are slated to mature on Oct. 21, 2030, according to the rating agency.
Four banks are underwriters on the deal: BofA
Securities, Morgan Stanley, Santander
US Capital Markets and Truist Securities, Moody’s said.
The asset pool is composed of more than 57 million contracts, primarily on smartphones, which have a weighted average (WA) customer tenure of 127 months. Loan sizes are only $477.50 on average, while borrowers attached to the contracts have weighted average FICO scores of 727.
Most of the transaction’s notes will be issued from the two class A tranches, which contain 81.75% of the assets, the rating agency said.
VZMT 2025-9’s notes benefit from several layers of credit enhancement, including initial subordination and overcollateralization in an amount equaling 8.25% of the note balance. There is also an initial reserve account funded to an amount equaling 1.00% of the note balance.
Overall, the deal benefits from total initial hard credit enhancement of 19.25% on the class A tranches, 13.0% on the class B notes and 9.25% on the class C notes.
Yet the notes are exposed to several credit risks, including an imbalance between the interest and assets. The mobile device contracts are noninterest bearing, but up to 25% of the class A notes could pay coupons based on compounded Secured Overnight Financing Rate (SOFR).
