Element Financial closed Chesapeake Funding II, the new $4.8 billion rated asset backed security funding conduit that Element has established as the permanent funding platform for its U.S. fleet management business.

In conjunction with the establishment of the new ABS conduit, Element issued $1.5 billion in variable funding notes and is expected to close an additional $1.8 billion in term notes on December 31, 2015. Subsequent to these issuances, Element will have un-drawn commitments of $1.5 billion from Chesapeake Funding II to fund future growth in fleet assets. Interest rate spreads for these notes were in line with previously funded fleet ABS transactions. Proceeds from the notes will be used to repay a portion of Element’s three-year term senior secured credit facility.

“By gaining early access to our new rated Chesapeake ABS conduit to permanently fund the U.S. fleet assets that we recently acquired from GE, we are ahead of schedule in bringing the funding costs attributable to these assets in line with the $90 million to $95 million in integration cost savings that we had earmarked for the GE fleet acquisition,” said Steven K. Hudson, Element’s CEO.

Chesapeake Funding II was established on the same structuring principles as Element’s initial fleet ABS conduit, Chesapeake Funding, which has closed more than 17 offerings in the term market since 1999 and has issued more than $7.7 billion in ABS securities to private and public investors since 2003, including four offerings totaling more than $2.2 billion in 2009 in the wake of the financial crisis.

“I’m particularly pleased that in the context of the current market, the response to the offering that we closed today was very strong with orders exceeding supply by a factor of almost two to one,” said Michel Beland, Element’s CFO.

JP Morgan Securities acted as the sole structuring agent and lead arranger for these transactions together with a syndicate of 14 lenders.