KBRA Assigns Preliminary Ratings to SCF Equipment Leasing 2022-2

NEW YORK--(BUSINESS WIRE)--KBRA assigns preliminary ratings to nine classes of notes issued by SCF Equipment Leasing 2022-2 (SCF 2022-2), an equipment ABS transaction.

SCF 2022-2 represents the tenth equipment ABS sponsored by Stonebriar Commercial Finance LLC. SCF 2022-2 will issue ten classes of notes totaling $711.5 million. The notes are secured by: (1) a portfolio of equipment lease contracts and equipment loan 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, aircraft, transportation, medical, energy and manufacturing equipment.

The aggregate discounted contract balance (the ADB) of the portfolio is approximately $741.2 million. The ADB is based on the projected equipment loan and lease cash flows, as well as the residual value of the related equipment, discounted at the respective Contract’s implicit rate of return (IRR). The weighted average IRR is 8.05%. The portfolio is comprised of 66 Contracts to 33 obligors. The average Contract balance is approximately $11.2 million and the average exposure to an obligor is approximately $22.5 million. The maximum exposure to an obligor is approximately $74.3 million or approximately 10.0% of the ADB. The Notes benefit from credit enhancement in the form of overcollateralization, excess spread, a reserve account and subordination (except for the Class G Notes).

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Related Publications

• Equipment Lease and Loan Global ABS Methodology
• ABS General Global Rating Methodology for Asset-backed Securities
• Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

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 Information Disclosure Form(s) 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 Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. 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.