The Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to six classes of debt securities issued by Encina Equipment Finance 2021-1, LLC (“Encina 2021-1”), an asset-backed securitization (ABS) backed by a pool of equipment loans , lease agreements were issued.
Encina 2021-1 represents the first public equipment ABS transaction from Encina Equipment Finance, LLC. Encina Equipment Finance, LLC was founded in 2017 and is headquartered in Westport, Connecticut. The company is an independent equipment finance company focused on financing discreet, high-revenue devices for midsize and large-scale tickets for large businesses.
As of April 30, 2021, the securitization value of the pool of equipment contracts supporting the transaction was approximately $ 285 million. The pool comprises 43 debtors with a highest debtor concentration of 6.6% and an average value for the securitization of contracts of approximately USD 2.5 million. The pool is diversified according to industries, device types and countries.
Encina 2021-1 will issue six tranches of debt securities totaling $ 258.44 million. The credit enhancement consists of overcollateralization, a reserve account, subordination for higher classes and an excessive spread. The initial overcollateralization of 9.25% is subject to a target which is the higher of 14.25% of the current securitization value and 8.75% of the initial securitization value. The reserve account is funded with an amount of at least 1.25% upon completion and may be released to at least 1% of the original pool balance in month 25.
Learn more about key credit considerations, sensitivity studies that take into account what factors can affect those credit ratings and how they can lead to an upgrade or downgrade, and ESG factors (where they are a major driver of change in creditworthiness or the rating outlook) can be found in the full rating report referenced above.
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A description of all material sources used to establish the rating and information on the methods (including all material models and sensitivity analyzes of the relevant material rating assumptions, if applicable) used to determine the rating are available on the forms to disclose information Here.
Information on the meaning of the individual assessment categories can be found here Here.
Please refer to the information disclosure forms above for more information about this rating action. For more information on KBRA policies, methods, rating scales and disclosures, see www.kbra.com.
Kroll Bond Rating Agency, LLC (KBRA) is a full-service rating agency registered with the US Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a rating agency with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority under the Temporary Registration Regime. In addition, KBRA is named by the Ontario Securities Commission as a designated rating organization for issuers of asset-backed securities for the purpose of filing a short prospectus or a shelf prospectus. KBRA is also recognized as a rating provider by the National Association of Insurance Commissioners.
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