Blue Bridge Financial, a specialty finance company that extends secured loans and leases on essential-use equipment to businesses, is preparing to sell $124.7 million in asset-backed bonds in its inaugural securitization.
The Reston, Va.-based company provides secured loans for revenue-producing equipment such as log loaders and freightliners to small- and medium-sized companies, according to the company's website.
Blue Bridge Financial has been operating since 2009, and originates loans through broker referrals and other independent sales channels, and directly to end users through vendors, according to ratings analysts from Kroll Bond Rating Agency. The latter began in Q3 2021, but the broker or independent sales channel continues to account for the majority of originations, according to KBRA.
Truist Securities is the structuring agent and initial note publisher on the deal, the Blue Bridge Funding 2023-1, which will issue notes through four tranches, according to KBRA. All of the notes have a Nov. 15, 2030 legal final maturity date, although their levels of initial hard credit enhancement vary, as well as their ratings.
The pool's diversification carries a mixed credit outlook, according to KBRA, with transportation accounting for 21.58% of the pool, the rating agency said.
Those initial hard credit enhancement levels range from 24.40% on the class A notes to 7.70% on the class D notes, according to KBRA. At closing, the deal is expected to have overcollateralization levels of 6.70%, building to a target of 12.50% of the current pool balance. After reaching the target, OC is subject to a floor of 0.50% of the initial pool balance.
Blue Bridge Funding also benefits from excess spread, subordination, and a reserve account funded at 1.00% of the initial pool balance at closing. The latter is non-amortizing and grows as a percentage of the pool balance over time.
KBRA expects to assign ratings of 'A' to the class A notes; 'BBB' to the class B notes; 'BB' to the class C notes and 'B' to the class D notes.
The deal structure also is protected from a rapid amortization event trigger. If the total current note balance is less than or equal to 15% of the total initial note balance, this could trigger a rapid amortization event. At that point all available funds are used to repay note principal sequentially in full, according to KBRA.
Blue Bridge originated the loans and services them, while GreatAmerica Portfolio Services will serve as the back-up servicer.
