Kroll Bond Rating Agency (KBRA) assigned preliminary ratings to seven classes of notes from SCF Equipment Leasing 2019-1 LLC and SCF Equipment Leasing Canada 2019 Limited Partnership Equipment Contract Backed Notes, Series 2019-1. The notes are newly issued asset-backed securities backed by a portfolio of equipment leases and loans.
The transaction is secured by: (1) a portfolio of equipment lease contracts and equipment loan contracts (together, the “Contracts”), together with interests in the related equipment and other collateral; (2) certain portfolio interest certificates evidencing 100 percent beneficial interest in a portfolio of leases of titled motor vehicles and the related equipment; and (3) equity interests in certain limited purpose entities formed to own aircraft leases and the related aircraft. The underlying Contracts are collateralized by essential use assets in a variety of industries, such as marine, rail, transportation and energy. All of the Contracts were directly or indirectly originated by Stonebriar Commercial Finance LLC or Stonebriar Commercial Finance Canada Inc.
The aggregate discounted balance (the ADB) of the portfolio is approximately $598.5 million. The portfolio is comprised of 90 contracts to 53 obligors. The average contract is approximately $7.5 million and the average exposure to an obligor is approximately $12.7 million. The maximum exposure to an obligor is approximately $101.8 million or approximately 15.1 percent of the ADB. The securitization is based on the projected equipment loan and lease cash flows discounted at the respective Contract’s internal rate of return (IRR). The weighted average IRR is 7.62 percent
The transaction benefits from credit enhancement in the form of overcollateralization, excess spread, a reserve account and subordination with respect to the Class A1 Notes, Class A2 Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes and Class F Notes.
The following are the notes, preliminary ratings and initial principal balance:
- Class A1 Notes — AAA (sf), $232,163,000
- Class A2 Notes — AAA (sf), $172,163,000
- Class B Notes — AA (sf), $70,757,000
- Class C Notes — A+ (sf), $60,649,000
- Class D Notes — BBB (sf), $26,955,000
- Class E Notes — BB (sf), $33,694,000
- Class F Notes — B (sf), $40,433,000
- Class G Notes — NR, $13,477,000