In The Tranches: You Can’t Get Simpler Than A Box

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A container lease asset-backed security may sound tricky – but it’s not. “It’s a steel box. It’s not that complicated,” said an investor speaking with SI. The investor had delved into the new SeaCube ABS (see story, page two), and found the collateral easy enough to wrap his mind around. He said some buyers worried because container deals were newer and rarely seen since the crisis, and that liquidity for the bonds wasn’t great. But the simplicity of the business model (renting out large steel boxes) put his mind at ease. He noted that after about 10 years the steel boxes wear out – they get ‘banged up’ apparently – and are sold into a thriving secondary market, where they’re often repurposed in types of low-income housing. Scratch ‘n dent residential mortgage-backed securities, anyone?