Diversified leases on medical, franchise, construction and vocational equipment will secure $410.1 million in asset-backed securities (ABS), as North Mill Equipment Finance sponsors its ninth equipment securitization.
Most of the notes will mature on July 15, 2032, while the senior A1 tranche has a final maturity date of March 16, 2026, according to analysts at Kroll Bond Rating Agency.
NMEF Funding 2025-A will sell five tranches of notes to investors, including the A1 short-term tranche.
The notes benefit from initial hard credit enhancement composed of on the A1 and A2 notes equaling 37.9% of the balance in the tranche. Such credit enhancement includes a reserve account, overcollateralization, excess spread and subordination for the senior classes.
NMEF's reserve account will be funded at 1.00% of the underlying pool's initial contract balance, KBRA said. It is non-amortizing, so over time the amount will grow as a percentage of the pool's balance. The notes also benefit from excess spread of about 0.25% per year, the rating agency said.
There is also a trigger embedded in the deal, attached to cumulative net losses. Should the cumulative net loss percentage exceed the cumulative net loss ratio breaches certain levels, based on where the transaction is in its collection period, it would set off a full turbo payment.
More than three thousand underlying contracts are in the collateral pool, which is fairly diversified by equipment type. Medical, franchise, construction and vocational equipment secures those contracts, representing 27.8%, 12.2%, 11.6% and 11.2%, respectively.
North Mill Equipment Finance originated the loans in the deal and services the loans, while GreatAmerica Portoflio Services Group is the back-up servicer, according to KBRA.
The rating agency assigned K1+ to the A1 notes and AAA to the A2 notes; A to the class B notes; and BBB and BB to classes C and D.
