Magazine article American Banker

Sperry to Offer Lease-Backed Securities: Computer Rentals to Provide Collateral in $200 Million Sale

Magazine article American Banker

Sperry to Offer Lease-Backed Securities: Computer Rentals to Provide Collateral in $200 Million Sale

Article excerpt

NEW YORK -- A Subsidiary of Sperry Corp. plans a public offering of $200 million worth of securities backed by leases on computer equipment, part of a trend toward converting receivables into instruments that can be easily traded.

The Sperry Lease Finance Corp.'s proposed deal has received approval from federal regulators and will come to market this week or next, said Laurence Fink, a managing director at First Boston Corp., the investment banking firm. Sperry's securities come on the heels of several private sales of securities backed by automobile loans. The sale foreshadows a number of planned larger public offerings of receivable-backed securities.

"We're looking at all the items on the asset side of a company's balance sheet to see if they can be packaged and sold," Mr. Fink said.

but the introduction of securities backed by consumer receivables has raised questions among accountants, who wonder if the new securities should get the same accounting treatment proposed for certain securities backed by mortgages.

The accounting question centers on whether the securities represent an actual sale -- which gets the assets on the books of the issuer -- or are simply debt financing. That same question is the focus of an ongoing debate at the Financial Accounting Standards Board, which has proposed that certain types of mortgage debt can be accounted for as a sale of assets.

The accounting board has tentatively said that issues of collateralized mortgage obligations, or CMOs, must be considered debt obligations of the issuer -- but provides an exception, under limited circumstances. …

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