Kroll Bond Rating Agency assigned preliminary ratings to five classes of notes issued by Dext ABS 2023-1, an equipment ABS transaction. Dext 2023-1 represents the third equipment ABS transaction to be sponsored by Dext Capital.
As of the Feb. 28, 2023 statistical cutoff date, the pool of equipment contracts backing Dext 2023-1 has an aggregate contract principal balance of $306.1 million, based on a 9.6% discount rate (statistical pool). The statistical pool includes 1,564 contracts, with an average contract balance of $195,723 and original and remaining lease term of 54 months and 47 months, respectively. The aggregate undiscounted residual value is equal to $7.0 million or 2.29% of the aggregate contract principal balance. The majority of the Statistical Pool is made up of contracts financing medical equipment. The top four obligors have concentrations greater than 2.0% each, with the top obligor representing 8.0%. This obligor is a multi-state healthcare system with high investment-grade credit characteristics. The statistical pool is diversified geographically with the largest state, Florida, representing approximately 19.2% and all other states at less than 12.4% each. The statistical pool benefits from a weighted average obligor time in business of 22.1 years.
Dext ABS 2023-1 will issue five classes of notes. Credit enhancement is comprised of overcollateralization, a cash reserve, subordination benefiting senior classes and excess spread. The overcollateralization is subject to a target equal to 5.50% of the initial aggregate contract principal balance and is non-amortizing after reaching this target level. The reserve account is funded at 1.00% of the initial aggregate contract principal balance and is non-amortizing.
