NewStar Financial, which has previously only securitized loans to small and medium-sized companies, is prepping ist first deal backed by equipment loans.

The issuer will securitize a $97.8 million pool of commercial small, mid and large-ticket equipment leases and loans via New Star Commercial Lease Funding 2015-1, according to DBRS.

NewStar is an experienced manager of middle-market loan securitizations, having issued 11 collateralized loan obligations (CLOs) to date with the aggregate capitalization of $4.5 billion, of which four have been redeemed in full.

The issuer has been around since 2004 and established its equipment finance business in 2012 under the leadership of Steve O’Leary, who has more than 30 years of experience in the origination, syndication, underwriting, management and workout of portfolios of asset-backed leases and loans.

DBRS has assigned preliminary ratings of ‘AA’ to $83.9 million of class A notes. The notes are structured with credit enhancement levels at 28.78%. The class B notes, rated ‘BBB’ , are structured with credit enhancement level of 16.67%

The collateral for this transaction consists of small-, mid- and large-ticket equipment financing in the form of loans, fair market value leases, discounted leases, conditional sale contracts as well as terminal rental adjustment clause (TRAC) and modified/split TRAC leases. TRAC leases give the borrower the option to purchase the equipment at the end of the lease term.

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