KBRA Assigns Preliminary Rating to SCF Equipment Leasing 2018-1 LLC and SCF Equipment Leasing Canada 2018 Limited Partnership Equipment Contract Backed Notes, Series 2018-1

NEW YORK--()--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to seven classes of notes from SCF Equipment Leasing 2018-1 LLC and SCF Equipment Leasing Canada 2018 Limited Partnership Equipment Contract Backed Notes, Series 2018-1. 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% 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 71 Contracts to 43 obligors. The average Contract is approximately $8.4 million and the average exposure to an obligor is approximately $13.9 million. The maximum exposure to an obligor is approximately $119.6 million or approximately 20.0% of the ADB. The securitization is based on the projected equipment loan and lease cash flows discounted at a rate of 9.12%.

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.

Class             Preliminary Rating             Initial Principal Balance
Class A1 Notes             AAA (sf)             $135,271,000
Class A2 Notes             AAA (sf)             $202,907,000
Class B Notes             AA (sf)             $68,833,000
Class C Notes             A+ (sf)             $68,833,000
Class D Notes             BBB (sf)             $23,942,000
Class E Notes             BB (sf)             $29,927,000
Class F Notes             B (sf)             $35,913,000
Class G Notes             NR             $11,971,000
 

Representations & 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 available here.

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:
Anthony Nocera, 646-731-2350
Senior Managing Director
anocera@kbra.com
or
Cecil Smart, Jr., 646-731-2381
Managing Director
csmart@kbra.com
or
Caitlin Colvin, 646-731-2465
Senior Director
ccolvin@kbra.com

Contacts

Kroll Bond Rating Agency
Analytical:
Anthony Nocera, 646-731-2350
Senior Managing Director
anocera@kbra.com
or
Cecil Smart, Jr., 646-731-2381
Managing Director
csmart@kbra.com
or
Caitlin Colvin, 646-731-2465
Senior Director
ccolvin@kbra.com