Alliance Funding Group is sponsoring its first equipment asset-backed securities deal, a deal that will raise $136.8 million in notes through the AFG ABS I, 2023-1.
AFG ABS has a statistical discounted pool balance of $115.2 million, and projects the cash flows that are discounted at a rate of 8.50%, according to a pre-sale report from Kroll Bond Rating Agency. The total collateral might increase by up to $31.3 million, as additional contracts are added during the three-month prefunding period.
Some 1,421 contracts are in the collateral pool, and they have an average balance of $81,092 KBRA said.
The pool is highly diversified by many measures—obligor, industry and state in which they operate. The deal has 1,228 total obligors and the largest one represents less than 0.50% of the pool, the rating agency said. The largest industry represented, relatively speaking, is the transportation industry that represents 19% of the pool.
General construction accounts for 13.84%; professional, scientific and technical services represents 5.94%; and miscellaneous manufacturing another 5.46%.
AFG ABS will repay the notes on a sequential-pro rata basis. Classes A-1 and A-2 will repay note interest on a pro rata basis.
CIBC World Markets Corp. and Truist Securities are the notes' initial purchasers. Alliance Funding Group is the originator and servicer, on the deal, which will issue the notes through five tranches.
Aside from subordination benefiting the senior classes, excess spread over-collateralization and a cash reserve provide credit enhancement to the notes.
KBRA expects to assign 'K1+' to the class A-1 notes; 'AAA' to the A-2 notes; 'A' to the class B notes; 'BBB' on the class C notes; and 'BB' on the class D notes.
The class A-1 notes have a legal final maturity date of Feb. 15, 2024; and the A-2 through D notes have a final maturity date of Sept. 16, 2030.
