GPU Financing Filters Further Into ABS With Planned Newton Deal

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Newton Commercial Finance, a joint venture between Apple Bank and Eagle Point Credit Management, is in early talks with investors about a potential $180 million bond offering partly backed by artificial intelligence chip loans.

(Bloomberg) -- Newton Commercial Finance, a joint venture between Apple Bank and Eagle Point Credit Management, is in early talks with investors about a potential $180 million bond offering partly backed by artificial intelligence chip loans.

The asset-backed securities are backed by equipment loans and leases, according to people with knowledge of the matter. Loans tied to AI chips, including graphic processing units or GPUs, make up about 15% of the collateral pool, the people said, asking not to be identified because they’re not authorized to speak publicly.

Plans and details aren’t yet final and may change, the people added. A representative for Newton Commercial Finance declined to comment.

The ABS deal would be the latest in a series of equipment loan and lease ABS that include exposure to chips. Other ABS equipment loan and lease deals in recent months from Stonebriar Commercial Finance and Wingspire Equipment Finance also included GPU exposure.

Stonebriar last month sold an $869 million ABS offering with GPU loans accounting for roughly 15% of the collateral, while GPU loans made up about 20% of the collateral in Wingspire’s more than $407 million transaction in September.

Newton Commercial Finance’s asset-backeds are expected to be rated by Morningstar DBRS, with ratings ranging from AAA to the BB tier, the people said. Other major equipment loan and lease types in the collateral pool include marine assets and fixed wing aircraft, which are currently expected to account for about 20% and 15% of the pool, respectively, according to the people.

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