KBRA Assigns Preliminary Ratings to SFS Asset Securitization LLC, Series 2018-1 Notes

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to four classes of Series 2018-1 notes (the “Series 2018-1 Notes”) issued by SFS Asset Securitization LLC.

This transaction is Strategic Funding Source’s (“SFS” or the “Company”) first securitization and it is expected that the proceeds of the sale will be used to provide extra funding capacity for SFS.

Founded in 2006, SFS is a leading provider of working capital to small businesses in the United States through loans and factoring agreements. SFS, directly and through its subsidiaries, provides loans and factors merchant receivables through the SFS platform, an automated application, underwriting and servicing platform. The SFS platform evaluates credit-worthiness of merchants using traditional underwriting methods as well as a proprietary risk scoring model.

The Notes will be secured by a revolving pool of receivables consisting of (i) business loans or (ii) merchant cash advances. The transaction benefits from sufficient credit enhancement comprised of overcollateralization, subordination of the junior classes of Notes, a reserve account and excess spread, as well as a dynamic structure that accelerates principal payments on the Notes in the event of weak performance. The transaction features a 36-month revolving period (the “Revolving Period”) during which time principal collections may be reinvested to purchase additional receivables, based on certain eligibility requirements.

The Notes will be “expandable” term notes such that at any time during the Revolving Period, the Issuer may periodically issue additional Notes, so long as certain conditions are met, including receipt of rating agency confirmation. The consent of existing noteholders will not be required for these additional issuances, and investors should note that any additional note issuance would dilute the control and vote of existing noteholders.

KBRA analyzed the transaction using KBRA’s Global General Rating Methodology for Asset-Backed Securities published on November 28, 2017.

For complete details on the analysis, please see KBRA’s Pre-Sale Report, SFS Asset Securitization LLC Series 2018-1, which was published today at www.kbra.com.

Preliminary Ratings Assigned: SFS Asset Securitization LLC, Series 2018-1

Notes   Preliminary Rating   Initial Principal Balance
Class A A- (sf) $ 65,394,000
Class B BBB- (sf) $ 19,131,000
Class C BB (sf) $ 5,777,000
Class D B (sf) $ 9,698,000

Representations and Warranties Disclosure

All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled Disclosure is available at the following link: SFS Asset Securitization LLC Representations and Warranties Disclosure.

Related Publications: (available at www.kbra.com)

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Kroll Bond Rating Agency
Analytical Contacts:
Chris Baffa, Associate Director, (646) 731-3312
cbaffa@kbra.com
or
Xilun Chen, Senior Director, (646) 731-2431
xchen@kbra.com
or
Lenny Giltman, Managing Director, (646) 731-2378
lgiltman@kbra.com
or
Anthony Nocera, Senior Managing Director, (646) 731-2350
anocera@kbra.com

Contacts

Kroll Bond Rating Agency
Analytical Contacts:
Chris Baffa, Associate Director, (646) 731-3312
cbaffa@kbra.com
or
Xilun Chen, Senior Director, (646) 731-2431
xchen@kbra.com
or
Lenny Giltman, Managing Director, (646) 731-2378
lgiltman@kbra.com
or
Anthony Nocera, Senior Managing Director, (646) 731-2350
anocera@kbra.com