A portfolio of aircraft and marine equipment lease and loan contracts, as well as other financial interests, including interests in the related equipment and other collateral, certain portfolio interest certificates demonstrating 100% beneficial interests in a portfolio of leases of titled motor vehicles, and equity interests in certain limited purpose entities formed to own aircraft leases and related aircraft.
The deal, known as SCF 2022-1 represents the ninth equipment ABS sponsored by SCF, and the deal has made several key changes to its collateral, credit enhancement and reserve account provisions, according to Kroll Bond Rating Agency.
SCF 2022-1’s reserve account is funded at 1.0% of the initial aggregate discount balance (ADB), which is not amortizing. This compares with a starting 1.5% reserve account on the SCF 2021-1 deal, which is permitted to amortize beginning in month 25, to 1% of the ADB, provided that the trust had exceeded the cumulative net loss trigger level.
BofA Securities leads a group of seven initial note purchasers, including BNP Paribas Securities and Credit Suisse Securities, according to KBRA. The deal will issue notes through nine classes of notes through a subordinate structure.
Stonebriar Commercial Finance, and Stonebriar Commercial Finance Canada originated the underlying contracts for obligors in the U.S. and Canada, respectively.
KBRA expects to assign a rating of ‘K1+’ to the $84.5 million class A-1 certificates. Other notes will receive ratings ranging from ‘AAA’ on classes A-2 and A-3 certificates, both amounting to $224.8 million, to ‘B’ on the $22.5 class F certificates.
In other changes to this transaction, total hard credit enhancement is lower throughout the capital structure, by 3% for the class A notes and 1% for the class G notes. Credit enhancement, however, remains consistent with KBRA’s individual rating category stresses, which the rating agency says reflects the collateral characteristics and performance.
Compared with the prior transaction, SCF 2021-1, the SCF 2022-1 deal is less concentrated in terms of top obligor. Indeed, the top obligor accounts for 9% of the deal’s ADB, down from 22% in the previous deal. The top five obligors represent 35% of the ADB, compared with 41% in the SCF 2021-1.
In terms of diversification by the deal’s securitization value, Texas represents the largest state, with 26.4%. Marine vessels represent the largest asset class, accounting for 27.5% of the portfolio, and the water freight category accounts for the largest industry, with 24.1%.
