KBRA assigns preliminary ratings to four classes of notes issued by VFI ABS 2022-1, LLC (“VFI 2022-1”), an equipment ABS transaction.

Varilease Finance, Inc. (“VFI”), founded in 2001 and headquartered in Salt Lake City, Utah, is an independent equipment finance company focused on leasing industrial and commercial equipment to upper- and middle-market businesses. VFI 2022-1 represents VFI’s first equipment ABS transaction.

As of the January 10, 2022 statistical cut-off date, the pool of equipment contracts backing VFI 2022-1 (“Statistical Pool”) has a pool balance of $150.41 million. The pool balance is based on the projected cash flows for each contract discounted at each contract’s discount rate. The weighted average discount rate for the Statistical Pool is 10.06%. As of the initial cut-off date, the pool balance will equal at least $150.41 million and is expected to have characteristics substantially similar to the Statistical Pool. The total collateral may increase by up to $25 million through the addition of equipment contracts during the three-month prefunding period. VFI 2021-1 will issue four classes of notes. Credit enhancement is comprised of overcollateralization, a cash reserve, a capitalized interest account, subordination benefiting senior classes and excess spread. The overcollateralization is subject to a target equal to 5.60% of the current pool balance and a floor equal to 2.50% of the initial pool balance. The reserve account is funded at 1.50% of the initial note balance (1.46% of the Statistical Pool) and is non-amortizing.

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Related Publications

• Equipment Lease and Loan Global ABS Methodology
• Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

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