Mecenate Leasing S.r.l.

09MAR2004 --- MECENATE LEASING S.r.L. ---
CLASS A1: E41.5M, AAA/AAA,(S&P/FITCH), EAL 1.67YRS, 3ME+27BPS, FEES 12.5BPS
CLASS A2: E140.1M, AAA/AAA, EAL 2.33YRS, 3ME+28BPS, FEES 18BPS
CLASS B : E16.9M, A/A, EAL 5.01YRS, 3ME+65BPS, FEES 50BPS
CLASS C : E9.4M, UNRATED
COMMON TERMS: LFM 2016; IP 100; PAY 23-MAR. LEAD UBS.

--- DEAL INFO ---
The Italian lease abs market was declared well and truly reopen last month
when Banca Intesa came with its E1.5bn blowout deal. Confirmation that the
legislative decree designed to clarify the position of leases in the event of
insolvency of the originator has become law has removed the uncertainty that has
surrounded lease abs in the past, and the asset class is performing much better
as a result.
Mecenate was originated by two small recently merged leasing companies,
Etruria Leasing, part of the BPEL cooperative banking group, and ACI Leasing,
part of the not-for-profit Italian Automobile Club which offers auto leases
through its 105-strong branch network. The companies merged at the end of last
year, and the new entity now ranks as the 8th largest in Tuscany (where 65pc of
its business is written) with 3.8pc of the market. In common with most other
Banco Popolare entities, much of the lease business is with existing bank
customers whose credit profile is already known.
The lease pool is reasonably granular with an average loan size of E32.8k and
exposure across the three sub-pools (auto, real estate, equipment) well balanced
at 28.8pc, 46.4pc and 24.8pc respectively. The largest single exposure is a real
estate lease for E1.8m (0.9pc), the average for that sub-pool running at E194k.
Intesa Lease has a E62k average loan size, 21.7/47.9/30.4pc sub-pools and
maximum single obligor exposure of 0.3pc. The Mecenate pool gives a weighted
average spread over Euribor of 440bps (Fitch), a useful amount especially when
combined with quite rigorous cumulative default triggers which trap the excess
spread. Credit enhancement runs at 14.5pc at the AAA level versus 8.6pc for
Intesa, a function of the relative sizes of the originators and less available
historical data.
Mecenate, unlike Intesa Lease, has a static pool, so there is a backlog of
payments to be made to noteholders after the 18 month withholding tax period is
up giving the Class A1 notes a very short average life. Normal redemption
profiles for the lease pool thus make the average lives of the two AAA tranches
very close to each other, original price talk of 27/29bps and 28/33bps turning
out to be just a 1bp differential at launch, both at the tight end of guidance.
The lack of a Moody's rating will have excluded some of the conduits and SIVs
who would have driven pricing in even further, evidenced by Intesa's 2.09yr note
printing at +20bps, 2-4bps in from talk, but there are plenty more investors to
take up the slack.
The small Mecenate was hugely oversubscribed by buyers from all over Europe
hunting for now well-understood assets. At the tighter levels, the Class A1s
were 4x subscribed, the A2s 5 times, resulting in 20pc allocations to accounts.