A portfolio of equipment leases from a range of industries, and other assets related to aircraft will secure $959.9 million in asset-backed securities (ABS) from the SCF Equipment Leasing 2025-1 transaction.
This is Stonebriar Commercial Finance's 13th equipment ABS, which will issue nine tranches of notes when it closes, according to Kroll Bond Rating Agency. The notes benefit from initial hard credit enhancement equaling 30% of the pool balance on all the senior notes, classes A1, A2 and A3.
Classes B, C, D, E, F and G are covered by enhancement levels of 23.0%, 17.0%, 11.0%, 8.0%, 5.0% and 2.5%, respectively, according to the rating agency.
The notes have legal final maturity dates of Feb. 20, 2026 on the A1 notes; July 22, 2030 on the A2 notes; Nov. 21, 2033 on the A3 notes, among the senior classes. Tranches B and C mature on Sept. 20, 2034; and the D through G classes mature on Nov. 20, 2035, according to KBRA.
Obligors are slightly more concentrated that the SCF 2024-1 transaction, with top obligors increased to 13.6%, up from 10.9%, and the top five obligors represented 53.1% of the pool, up from 42.2%, the rating agency said.
Yet the obligor credit quality has improved over the last deal, KBRA said. The largest portion of the pool is in the SCF Risk Grade 6, at 43.1%, a drop from 58.7%. Also, the percentage of obligors in higher credit quality grades—2 through 5—increased to 56.9%, from 41.3%, according to the rating agency.
Plano, Texas-based SCF and Stonebriar Commercial Finance Canada originated all 56 contracts in the asset pool, which were extended to 33 obligors, according to KBRA. The contracts have an average balance of $17.3 million, and by obligor the average exposure is $29.3 million, according to the rating agency.
The transaction will repay investors through a senior-subordinate structure. The notes also benefit from overcollateralization at a target level of 7.0%. Only after target overcollateralization is met will the classes F and G notes accrue interest.
The structure also includes a cumulative net loss trigger.
KBRA assigns K1+ to the A1 notes; AAA to the A2 and A3; AA+ to the class B notes; A+ to the class C notes; BBB+ to the class D notes; BBB to the class E notes and BB+ to the class F notes.
