KBRA Rates Stonebriar Commercial Finance’s Latest ABS Transaction

Kroll Bond Rating Agency assigned ratings to eight classes of notes issued by SCF Equipment Leasing 2023-1 LLC and SCF Equipment Leasing Canada 2023-1 Limited Partnership (collectively SCF 2023-1), an equipment ABS transaction from Stonebriar Commercial Finance.

SCF 2023-1 represents the 11th equipment ABS sponsored by Stonebriar Commercial Finance. The SCF 2023-1 transaction is secured by: (1) a portfolio of equipment lease contracts and equipment loan contracts (together, the 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 underlying contracts are collateralized by assets in a variety of industries, such as marine, rail, aircraft, transportation, medical, energy and manufacturing equipment. All of the contracts were directly or indirectly originated by Stonebriar Commercial Finance or Stonebriar Commercial Finance Canada.

SCF 2023-1 will issue nine classes of notes, including a short-term money market tranche. Credit enhancement includes a reserve account, overcollateralization, subordination for senior classes and excess spread. The aggregate discounted contract balance (the ADB) of the portfolio was approximately $888.82 million as of Sept. 30. 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 10.13%. The portfolio is comprised of 54 contracts to 39 obligors. The average contract balance is approximately $16.46 million and the average exposure to an obligor is approximately $22.79 million. The maximum exposure to an obligor is approximately $63.82 million or approximately 7.18% of the ADB.

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