TSX:EFN - Post Discussion
Post by
retiredcf on Apr 26, 2023 9:35am
RBC
April 25, 2023
Element Fleet Management Corp.
Announces upsized US$750MM ABS issue and other funding updates
TSX: EFN | CAD 17.01 | Outperform | Price Target CAD 27.00
Sentiment: Neutral
Details: Element Fleet announced several funding related updates today:
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Element issued US$750MM of ABS notes secured by its U.S. fleet assets. The issue was upsized from US$500MM with reduced funding costs due to strong investor demand.
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Element upsized its secondary senior unsecured revolving credit facility by US$100MM to US$700MM. This followed its previously announced (when EFN reported Q4/22 results) US$500MM increase to its primary unsecured revolving credit facility.
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Element pre-announced its Q1/23 syndicated origination volume of $690MM, which is below our $810MM forecast, but is up Y/Y vs. $661MM in Q1/22. Element noted $371MM was syndicated during the last 2 weeks of March, which we think is notable as this coincided with the capital markets disruptions largely driven by events in the U.S. regional banking sector. Given EFN re- affirmed its 2023 guidance of US$3 to $4B of syndicated originations, we are not concerned about Q1/23 syndications coming
in below our forecast.
Our take: We think today's announcement further demonstrates the diversity, depth and strength of Element's funding sources. Element Fleet is our #1 high-conviction best idea as we think it provides significant growth potential even in a recession, high inflation and/or high interest rate environment, and also strong defensive attributes.
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