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Startup Dext launches debut medical-equipment ABS deal

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A startup finance specialist for mission-critical medical equipment is launching its first securitization, according to Kroll Bond Rating Agency.

In a presale report issued Wednesday, Kroll reported that Dext Capital LLC is sponsoring a bond sale totaling $123.76 million secured by small- and medium-ticket equipment loans for magnetic resonance imaging, pharmaceutical/lab, diagnostic, robotics and other advanced medical equipment.

Dext ABS 2020-1, structured via Credit Suisse, will feature four classes of notes, including a $97.36 million Class A tranche supported by 25.85% credit enhancement and a preliminary AA- rating. The Class A notes are expected to price at a fixed rate of 1.45%.

Dext Capital LLC was founded in 2018, managed by former healthcare equipment lending specialized from BE Capital. It is headquartered near Portland, Ore.

The collateral pool will involve contracts from 496 obligors in the hospital and medical office field who have been in business an average of 23 years. The 611 contracts have an average balance of $209,258, with weighted average original terms of 55 months (average seasoning of seven months).

While the COVID 19 pandemic has resulted in troubled loans in equipment finance portfolios, Dext “has so far benefited from its concentration in mission-critical medical equipment” as well as its diversified managed portfolio, according to Kroll’s presale report.

“While most physician practices were forced to close during lockdown periods of the pandemic, Dext’s obligor mix includes a significant portion of hospitals that remained open,” the presale report stated. Total deferral requests amounted to less than 8% of the total managed portfolio, all of which have resumed payments.

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