Fitch Ratings assigns expected ratings to NOW Trust 2026-1 structured finance deal
A new structured finance issuance is moving forward with expected ratings tied to lease-backed notes in NOW Trust 2026-1. The assessment points to strong historical asset performance and credit support within the transaction structure as key factors behind the rating view.
Highlights
- Fitch Ratings assigns expected ratings to NOW Trust 2026-1, a structured finance transaction backed by lease payments from multiple contracts.
- Strong historical collateral performance and robust credit enhancements drive Fitch's positive assessment of the deal's structure and asset quality.
- Fitch's expected ratings signal to investors the credit profile and resilience of the planned notes, influencing demand in asset-backed securities markets.
Lease-backed issuance structure and rating basis
As reported by Fitch Ratings, NOW Trust 2026-1 is a new structured finance transaction involving the issuance of notes backed by lease payments from various contracts.Fitch says the expected ratings reflect its evaluation of the transaction's structure, the performance of the collateral and the underlying credit quality of the leases. The agency cites the strong historical performance of the underlying assets and the adequacy of credit enhancements built into the deal structure among its main considerations.
Implications for structured finance investors
The expected ratings provide an early signal to investors about the credit profile of the planned notes and the resilience of the underlying lease assets. In structured finance markets, such assessments can help frame demand for new issuance by indicating how agencies view collateral strength and available protections against losses.The transaction also underscores continued use of lease-payment cash flows as backing for asset-backed securities. The strength of collateral performance and the level of credit enhancement remain central to how these deals are assessed in the broader structured finance sector.
Our earlier report on Fitch’s expected ratings for the Progress 2026-2 Trust RMBS explained that the AUD750 million floating-rate issuance is backed by a pool of conforming Australian home loans, with portfolio metrics such as loan-to-value ratios central to the assessment. It also outlined how structural protections—like a liquidity facility and an excess reserve—are designed to support timely payments, while warning that weaker economic conditions and higher defaults could erode credit enhancement and pressure ratings.
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