Kroll Bond Rating Agency (KBRA) has assigned preliminary ratings to six classes of notes issued by Post Road Equipment Finance 2025-1 (PREF 2025-1), a securitization backed by equipment lease and loan contracts. The transaction, totaling $406.1 million, represents the fourth asset-backed securitization (ABS) sponsored by Post Road Equipment Finance (PREF).
PREF, an independent equipment finance company headquartered in Westport, CT, specializes in financing revenue-generating essential-use medium- and large-ticket equipment for corporate obligors across industries such as manufacturing, transportation, healthcare and waste management. The company, established in 2017, underwent a rebranding in 2023, transitioning from its former name, Encina Equipment Finance.
Transaction Overview
The PREF 2025-1 portfolio, valued at approximately $445.8 million as of Dec. 31, 2024, includes 170 contracts with 67 obligors, featuring a weighted average yield of 10.49%. The collateral comprises 55.15% loans and finance leases and 44.85% true leases. The weighted average remaining term for the contracts is 45 months.
Key details of the securitization include:
- Credit Enhancements: Overcollateralization, excess spread, a reserve account and subordination for senior classes.
- Obligor Exposure: The average exposure per obligor is $6.65 million, with a maximum exposure of $29.39 million (6.59% of the securitization value).
- Portfolio Composition: Industries represented in the portfolio include manufacturing, transportation, healthcare and waste management, among others.
The six classes of notes include a short-term money market tranche and are structured to provide investors with varying levels of risk and return. The securitization’s structure benefits from KBRA’s thorough review and rating methodologies, which assess credit considerations, potential risks and underlying collateral characteristics.
Access ratings and relevant documents
KBRA Ratings Methodologies
The preliminary ratings assigned by KBRA were informed by several methodologies, including its Equipment Lease & Loan ABS Global Rating Methodology and Structured Finance Counterparty Methodology. The agency also incorporated ESG factors and conducted sensitivity analyses to account for potential risks that could influence the ratings.
Further details on KBRA’s methodologies, rating scales and disclosures can be accessed on the agency’s website.
