KBRA assigned preliminary ratings to five classes of notes issued by PEAC Solutions Receivables 2025-1 (PEAC 2025-1), an equipment ABS transaction.
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, as well as using the contracts’ rate for the working capital loans. As of Dec. 31, 2024, based on a discount rate of 7.00% for the leases and loans, the aggregate securitization value (Cut-off ASV) will be approximately $766.07 million.
The cut-off ASV will include cashflows from three types of receivables: small ticket equipment contracts originated by PEAC Solutions (equipment receivables) (49.24%), equipment contracts financing small- to mid- ticket equipment originated or acquired by Xerox and purchased by PEAC Solutions (Xerox equipment receivables) (46.10%) and working capital loans (working capital receivables) (4.66%). The contracts are “hell or high water” obligations without ongoing performance obligations of the lessors.
PEAC 2025-1 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 14.00% 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.
