Kroll Bond Rating Agency assigned preliminary ratings to six classes of notes issued by Post Road Equipment Finance 2024-1, LLC (PREF 2024-1), an equipment ABS transaction from Post Road Equipment Finance. PREF 2024-1 represents the third equipment ABS transaction sponsored by Post Road Equipment Finance.
Founded in 2017 and headquartered in Westport, CT, Post Road Equipment Finance is an independent equipment finance company focused on financing discrete revenue-producing essential-use medium- and large-ticket equipment to corporate obligors. The company was formerly known as Encina Equipment Finance and changed its name in March 2023 to Post Road Equipment Finance.
The PREF 2024-1 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, including manufacturing, transportation and warehousing, healthcare and social assistance, and waste management and remediation services, amongst others. PREF 2024-1 will issue six classes of notes, including a short-term money market tranche (the notes) totaling $335.2 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 $368.8 million as of Dec. 31, 2023. The securitization value 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 lease rate or interest rate. The weighted average yield of the underlying contracts is approximately 10.31%. The portfolio is comprised of 120 contracts to 60 obligors. The average contract balance is approximately $3.1 million and the average exposure to an obligor is approximately $6.1 million. The collateral is comprised of 78.4% loans and finance leases and 21.6% true leases. The weighted average original and remaining contract terms are 56 months and 45 months, respectively. The maximum exposure to an obligor is approximately $27.5 million or approximately 7.5% of the securitization value.
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