Container ABS: Continued Performance Despite Shipping Industry Stress

Abstract

Shipping container asset-backed securities (ABS) face the challenges presented by a volatile industry, often-strained lessees, and asset supply and demand risks. However, container securitizations to date have been able to navigate these rough waters. Fitch Ratings believes future transactions, if structured with appropriate credit protection levels, can continue to do so. This article discusses Fitch’s considerations in reviewing container securitizations, including an assessment of sector- and transaction-specific risks as well as an analysis of recent collateral trends that could influence transaction performance. Factors discussed in the assessment of container ABS risks include cyclicality, utilization rates, lease rates, asset values, lessee defaults, recoveries, manager (servicer) reliance, asset (container) types, lease types, and lessee concentration.