Kroll Bond Rating Agency assigned preliminary ratings to the 2020-1 Class A and Class B notes issued by GCI Funding (the issuer), a container leasing securitization. The GCI Funding I LLC master trust is designed to allow a special purpose entity and wholly-owned subsidiary of Global Container International to issue multiple series of notes. The Series 2020-1 will be the first series issued out of this trust.

The securitization is collateralized by a portfolio of 102,215 containers with a net book value of $290.1 million and their respective leases. The fleet comprises approximately 95.7% dry units, 3.4% refrigerated units (reefers) and fewer than 1% specials. As reefers cost approximately $13,000 versus approximately $1,900 for standard dry container boxes, the net book value (NBV) percentage of the portfolio that are dry units is 82.8% and reefers is 15.4%. Approximately 74.5% of the collateral pool by NBV is on long-term lease with an average remaining term of 77 months, while 25.5% of the collateral pool by NBV is on finance lease. None of the containers are on master lease and there are no units off-hire. The containers are young, with a weighted average age of 1.8 years.

The Series 2020-1 securitization includes a $232.79 million senior class (Class A) and a $11.79 million subordinate class (Class B). The Class A has a 79% advance rate and the Class B has an 83% advance rate. The required advance rate of both classes will decrease, on a monthly basis, by 1% per year for the first four years and then 2% annually thereafter.

The securitization is structured with interest being paid sequentially to both classes, followed by sequential principal payments based on a 10-year amortization schedule and any supplemental principal. Supplemental principal is paid when the outstanding principal balance of a respective class is greater than its asset base. The series asset base is calculated by multiplying the adjusted aggregate asset value of the containers by the advance rate and then by the series asset allocation. The series also includes early amortization events whereby the senior class receives all funds after interest is paid on both classes. Series specific early amortization events include: an EBIT ratio less than 1.10:1.00 for four quarters, the weighted average age of the collateral pool exceeds nine years, an asset based deficiency exists for 30 days, or a series specific event of default.