Equipment loan and lease contracts will secure the $161 million, Crossroads Asset Trust 2022-A transaction, from sponsor Crossroads Equipment Lease & Finance, its second term asset-backed securitization deal under 144A.
Actually, the trust's main asset will be a 100% beneficial interest in a grantor trust, whose principal assets are the lease and loan contracts, which finance trailers, trucks and transportation-related equipment, according to Morningstar | DBRS.
While U.S. Bank Trust is the indenture trustee and paying agent on the transaction, Wilmington Trust will act as the origination, owner and grantor trust trustee on the deal, DBRS explains in a pre-sale report. The rating agency expects the deal to close on November 30, DBRS said.
As for the capital structure, Crossroads Asset Trust 2022-A will issue notes through five classes, and is expected to repay noteholders sequentially.
As of September 30, 2022, the deal's statistical cutoff date, the collateral pool consisted of assets with a securitization value of $140.4 million, representing 1,407 contracts extended to 1,209 obligors, DBRS said.
On average the contracts had a balance of $99,764 and obligors had balances of $116,102, as some obligors had more than one contract, the rating agency said.
The notes benefit from several forms of credit enhancement, including initial credit enhancement that ranges from of 72.9% on the $50 million, A-1 notes through 9.50% on the $10.6 million, class D notes.
Aside from subordination, Crossroads' other forms of credit enhancement include overcollateralization, cash held in a reserve account and available excess spread, DBRS said.
Another potential form of credit enhancement is that Crossroads participates in the California Capital Access Program for Small Business (CalCAP), a program sponsored by the California Pollution Control Financing Authority. DBRS notes that as much as 27.50% of the aggregate securitization value might be represented by financed units, essentially loans or leases, enrolled in the CalCAP program.
Should any of the financed units experience a charge off, any losses might be covered by funds in Crossroads' in CalCAP's loan loss reserve account.
