KBRA assigns preliminary ratings to six classes of notes issued by Post Road Equipment Finance 2026-1 (PREF 2026-1), an equipment ABS transaction.
PREF 2026-1 represents the fifth equipment ABS transaction sponsored by Post Road Equipment Finance. The PREF 2026-1 transaction is secured by a portfolio of equipment lease and loan contracts. The underlying contracts are collateralized by medium- and large-ticket equipment in a variety of industries such as manufacturing, transportation and warehousing, healthcare and social assistance and waste management and remediation services, amongst others. PREF 2026-1 will issue six classes of notes, including a short-term money market tranche totaling $501.6 million. The notes benefit from credit enhancement in the form of overcollateralization, excess spread, a reserve account and subordination for senior classes.
The securitization value of the portfolio is approximately $548.8 million as of Feb. 28, 2026 (cut-off date). The securitization value is, for the fixed rate contracts, 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 lease rate or interest rate and, for the floating rate contracts the principal balance of the contract. The weighted average yield of the underlying contracts is approximately 9.04%. The portfolio is comprised of 216 contracts to 59 obligors. The average contract balance is approximately $2.54 million and the average exposure to an obligor is approximately $9.30 million. The collateral is comprised of 62.96% loans and finance leases, and 37.04% true leases. The weighted average original and remaining contract terms are 63 months and 54 months, respectively. The maximum exposure to an obligor is approximately $43.01 million or approximately 7.84% of the securitization value. Approximately 18.39% of the securitization value has been contributed by a third party out of its forward flow agreement with Post Road, whereby said third party purchased certain Post Road originated assets that the latter continued to service.
