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

Marlin 2022-1 represents Marlin Leasing Corporation’s (“Marlin” or the “Company”) 12th equipment ABS. Marlin, a wholly-owned subsidiary of Marlin Business Services Corp. (“MBSC”), is an independent commercial finance company founded in June 1997 to originate and service small-ticket equipment leases. Beginning in 2015, MBSC’s originations expanded, through Marlin’s affiliate Marlin Business Corporation (f/k/a Marlin Business Bank), to include an unsecured working capital loan product with primarily the same obligors as the small ticket equipment lease product. Marlin’s prior equipment ABS, Marlin Receivables 2018-1 LLC, closed in July 2018 and has fully repaid. Prior to the 2018 issuance, Marlin had not issued an equipment ABS since February 2010.

Marlin 2022-1 will issue six classes of notes, including a short-term tranche. Credit enhancement includes excess spread, a reserve account, overcollateralization and, for senior classes, subordination. The overcollateralization is subject to a target equal to 12% of the current pool balance and a floor equal to 1% of the initial pool balance. The reserve account is funded at 0.50% of the initial pool balance and is non-amortizing. The aggregate initial principal amount will be either $695.27 million (“Large Pool”) or $500.55 million (“Small Pool”). The sponsor will make the determination regarding the aggregate initial principal amount of the notes based on, among other considerations, market conditions and investor demand at the time of pricing.

The aggregate securitization value (“ASV”) represents the discounted value of the projected cash flows of the contracts included in the collateral pool using a discount rate based on the interest rate on the notes plus fees and other amounts. As of April 30, 2022, based on a discount rate of 5.78% for the equipment loans and leases, the aggregate securitization value (“Statistical ASV”) will be $759.06 million for the Large Pool or $546.47 million for the Small Pool. The Statistical ASV will include cashflows from three types of originations: small ticket equipment contracts (93% Large Pool/91% Small Pool), equipment contracts financing mid- to large- ticket equipment originated by a third party and purchased by Marlin (5% Large Pool/7% Small Pool) and working capital loans originated by Marlin Business Corporation and purchased by Marlin (3% Large Pool/3% Small Pool).

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Related Publications

• Equipment Lease and Loan Global ABS Methodology
• ABS General Global Rating Methodology for Asset-backed Securities
• 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.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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