Kroll Bond Rating Agency assigned preliminary ratings to five classes of notes issued by Verdant Receivables 2023-1 LLC (Verdant 2023-1), an equipment ABS transaction from Verdant Commercial Capital.
Verdant Commercial Capital is a small- and medium-ticket independent equipment finance company founded in July 2017 and headquartered in Cincinnati. Verdant employs a vendor model generating originations through relationships with original equipment manufacturers, distributors and resellers. Verdant 2023-1 represents the company’s first public equipment ABS transaction. The Verdant 2023-1 transaction is secured by a portfolio of equipment lease and loan contracts, together with interests in the related equipment.
As of June 30, the statistical calculation date for KBRA’s ratings, the pool of equipment contracts backing Verdant 2023-1 had an aggregate discounted contract balance of $264.79 million, based on the statistical discount rate of 8.34%. The aggregate discounted contract balance represents the aggregate present value of the expected cash flows on each contract, discounted at the greater of the discount rate or the individual contract rate. The initial cutoff date was July 31. Credit enhancement is comprised of overcollateralization, a cash reserve, subordination benefiting senior classes and excess spread.
