Although relatively dormant throughout the duration of the financial crisis, the volume of securitization of equipment leases is expected to increase steadily in the second half of 2010 and into 2011 due to its flexibility and usefulness as a corporate financing tool. Leases, once considered a new asset class, have been accepted in the mainstream of asset classes and have now been securitized in many forms. For the past decade, a wide variety of equipment leases have been securitized, including leases of office equipment, computers (both personal and mainframe computers), medical equipment, telecom equipment, dental equipment, beauty parlor equipment, railcars, exercise equipment, video equipment and data processing equipment. Outside of the equipment lease sector, automobile leases, truck leases, motorcycle leases, recreational vehicle leases, cell tower leases and heavy machinery leases have been readily securitized.

In addition to the various challenges confronting issuers of lease-backed securities in these extraordinary times, sponsors of such securitizations are now grappling with recent amendments that could significantly impact customarily used lease-backed structures.

The purpose of this article is to discuss the typical structure deployed in equipment lease securitizations as well as the variations in this structure depending on whether sale treatment is the objective and how this structure has been impacted by recent statements issued by the Financial Accounting Standards Board (FASB), which alter existing applicable accounting rules.

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