KBRA assigned preliminary ratings to six classes of notes issued by Encina Equipment Finance 2022-1, LLC (Encina 2022-1), an equipment ABS transaction.

Encina Equipment Finance, founded in 2017 and headquartered in Westport, CT, is an independent equipment finance company focused on financing discrete revenue-producing essential-use medium- and large-ticket equipment to large corporate obligors. Encina 2022-1 represents Encina’s second public equipment ABS transaction.

As of April 30, 2022, the securitization value of the pool of equipment contracts backing the transaction is approximately $280.1 million. The pool includes 50 obligors with a top obligor concentration of 7.6% and an average contract securitization value of approximately $1.8 million. The pool is diversified by industries, equipment types and states.

Encina 2022-1 will issue six tranches of notes totaling $246.5 million. Credit enhancement consists of overcollateralization, a reserve account, subordination for senior classes and excess spread. The initial overcollateralization of 12.0% is subject to a target equal to the greater of 15.0% of the current securitization value and 6.5% of the initial securitization value. The reserve account will be funded 1.0% at closing and is non-amortizing.

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