KBRA assigns ratings to eight classes of notes issued by SCF Equipment Leasing 2023-1 LLC and SCF Equipment Leasing Canada 2023-1 Limited Partnership (collectively SCF 2023-1), an equipment ABS transaction.

SCF 2023-1 represents the 11^th equipment ABS sponsored by Stonebriar Commercial Finance LLC (SCF or the Company). The SCF 2023-1 transaction is secured by: (1) a portfolio of equipment lease contracts and equipment loan contracts (together, the Contracts), together with interests in the related equipment and other collateral; (2) certain portfolio interest certificates evidencing 100% beneficial interest in a portfolio of leases of titled motor vehicles and the related equipment; and (3) equity interests in certain limited purpose entities formed to own aircraft leases and the related aircraft. The underlying Contracts are collateralized by essential use assets in a variety of industries such as marine, rail, aircraft, transportation, medical, energy and manufacturing equipment. All of the Contracts were directly or indirectly originated by SCF or Stonebriar Commercial Finance Canada Inc. Founded in 2015, SCF is a privately owned commercial equipment finance company located in Plano, TX. The Company originates secured loans and leases in a variety of industries that are collateralized by essential use assets. As of June 30, 2023, SCF had funded approximately $9.5 billion of investments with a current owned portfolio of $4.6 billion in net investment.

SCF 2023-1 will issue nine classes of notes, including a short-term money market tranche. Credit enhancement includes a reserve account, overcollateralization, subordination for senior classes, and excess spread. The aggregate discounted contract balance (the ADB) of the portfolio is approximately $888.82 million as of September 30, 2023. The ADB is based on the projected equipment loan and lease cash flows, as well as the residual value of the related equipment, discounted at the respective contract’s implicit rate of return (IRR). The weighted average IRR is 10.13%. The portfolio is comprised of 54 contracts to 39 obligors. The average contract balance is approximately $16.46 million and the average exposure to an obligor is approximately $22.79 million. The maximum exposure to an obligor is approximately $63.82 million or approximately 7.18% of the ADB.

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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.

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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. 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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