KBRA assigned preliminary ratings to five classes of notes issued by PEAC Solutions Receivables 2024-1 (PEAC 2024-1), an equipment ABS transaction. PEAC 2024-1 represents PEAC Solutions’ 13th equipment ABS.
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% for the equipment loans and leases, the aggregate securitization value 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 (50.00%)
- Small ticket equipment contracts originated by PEAC Solutions (44.71%)
- Working capital loans (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.
