Kroll Bond Rating Agency (KBRA) assigned preliminary ratings to nine classes of notes issued by SCF Equipment Leasing 2022-2 (SCF 2022-2), an equipment ABS transaction. The underlying contracts are guaranteed by essential use assets in a variety of industries such as marine, rail, aircraft, transportation, medical, energy and manufacturing equipment. SCF 2022-2 represents the 10th equipment ABS sponsored by Stonebriar Commercial Finance.

SCF 2022-2 will issue 10 classes of notes totaling $711.5 million. The notes are secured by: (1) a portfolio of equipment lease contracts and equipment loan contracts, together with interests in the related equipment and other collateral; (2) certain portfolio interest certificates evidencing 100% beneficial interest in a portfolio of leases of titled motor vehicles and the related equipment; and (3) equity interests in certain limited purpose entities formed to own aircraft leases and the related aircraft.

The aggregate discounted contract balance (ADB) of the portfolio is approximately $741.2 million. The ADB is 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 implicit rate of return (IRR). The weighted average IRR is 8.05%. The portfolio is comprised of 66 contracts to 33 obligors. The average contract balance is approximately $11.2 million and the average exposure to an obligor is approximately $22.5 million. The maximum exposure to an obligor is approximately $74.3 million or approximately 10.0% of the ADB. The notes benefit from credit enhancement in the form of overcollateralization, excess spread, a reserve account and subordination.