KBRA Assigns Preliminary Ratings to PEAC Solutions Receivables 2024-1

NEW YORK--(BUSINESS WIRE)--KBRA assigns preliminary ratings to five classes of notes issued by PEAC Solutions Receivables 2024-1 (PEAC 2024-1), an equipment ABS transaction.

Marlin Leasing Corporation was originally founded as a small ticket independent equipment leasing company in 1997. During July 2022, Marlin Leasing Corporation elected to rebrand as Marlin Leasing Corporation d/b/a PEAC Solutions (PEAC Solutions or the Company), to align with the family of finance companies acquired by HPS Investment Partners, LLC, including PEAC UK and PEAC Europe. PEAC 2024-1 represents PEAC Solutions’ 13th equipment ABS. The Company is a nationwide provider of commercial lending solutions and services small and mid-size businesses. The Company’s products and services include loans and leases for the acquisition of mission critical commercial equipment as well as working capital loans. Equipment loans and leases and working capital loans generally have a maximum of $5 million and $250,000, respectively, for any single loan or lease. PEAC Solutions entered into a forward flow agreement with Xerox Corporation (Xerox) and its captive financing unit in December 2022. Since December 2023, PEAC Solutions also acts as Xerox’s exclusive origination and servicing partner for Xerox’s dealer owned indirect originations. PEAC Solutions has purchased approximately $1.4 billion in Xerox receivables to date.

The aggregate securitization value (ASV) represents the discounted value of the projected cash flows of the contracts included in the collateral pool using a discount rate based on the interest rate on the notes plus fees and other amounts for the lease and loan contracts, and using the contracts’ rate for the working capital loans. As of April 30, 2024, based on a discount rate of 7.85% (Statistical Discount Rate) for the equipment loans and leases, the aggregate securitization value (Statistical ASV) will be approximately $668.15 million. The Statistical ASV will include cashflows from three types of receivables: equipment contracts financing small- to mid- ticket equipment originated or acquired by Xerox and purchased by PEAC Solutions (Xerox Equipment Receivables) (50.00%), small ticket equipment contracts originated by PEAC Solutions (Equipment Receivables) (44.71%) and working capital loans (Working Capital Receivables) (5.29%). The contracts are hell or highwater obligations without ongoing performance obligations of the lessors.

PEAC 2024-1 will issue five classes of notes, including a short-term tranche. Credit enhancement includes excess spread, a reserve account, overcollateralization and subordination (except for Class C Notes). The overcollateralization is subject to a target equal to 13.40% of the current ASV and a floor equal to 1.00% of the initial ASV. The reserve account is funded at 0.50% of the initial ASV and is non-amortizing.

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Methodologies

• ABS: Equipment Lease & Loan ABS Global Rating Methodology
• Structured Finance: 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. 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.

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