Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to eight classes of notes from SCF Equipment Leasing 2020-1 LLC and SCF Equipment Leasing Canada 2020-1 Limited Partnership Equipment Contract Backed Notes, Series 2020-1. The notes are newly issued asset-backed securities (ABS) backed by a portfolio of equipment leases and loans.
The transaction represents the seventh equipment ABS serviced by Stonebriar Commercial Finance LLC. The collateral backing the transaction includes: (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% 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 rail, transportation and manufacturing equipment. All of the Contracts were directly or indirectly originated by Stonebriar Commercial Finance LLC or Stonebriar Commercial Finance Canada Inc.
The aggregate discounted contract balance (the "ADB") of the portfolio is approximately $598.8 million. The portfolio is comprised of 97 Contracts to 41 obligors. The average Contract is approximately $6.2 million and the average exposure to an obligor is approximately $14.6 million. The maximum exposure to an obligor is approximately $68.1 million or approximately 11.37% 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 8.54%.
The Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class E and Class F rated Notes benefit from credit enhancement in the form of overcollateralization, excess spread, a reserve account and subordination.
- General Global Rating Methodology for Asset-Backed Securities
- Global Structured Finance Counterparty Methodology
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the U.S. Information Disclosure Form located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA.
Joanne DeSimone, Senior Director (Lead Analyst)
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Zara Shirazi, Senior Director
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James Chiavaro, Analyst
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Cecil Smart, Jr., Managing Director (Rating Committee Chair)
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Ted Burbage, Managing Director
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