KBRA assigns preliminary ratings to five classes of notes issued by Dext ABS 2023-1, LLC (Dext 2023-1), an equipment ABS transaction.

Dext 2023-1 represents the third equipment ABS transaction to be sponsored by Dext Capital, LLC (Dext). Dext, founded in 2018 and headquartered near Portland, Oregon, is an independent equipment finance company focused primarily on financing medium- and small-ticket medical equipment.

As of the February 28, 2023 statistical cutoff date, the pool of equipment contracts backing Dext 2023-1 has an aggregate contract principal balance of $306.1 million, based on a 9.6% discount rate (Statistical Pool). The Statistical Pool includes 1,564 contracts, with an average contract balance of $195,723 and original and remaining lease term of 54 months and 47 months, respectively. The aggregate undiscounted residual value is equal to $7.0 million or 2.29% of the aggregate contract principal balance. The majority of the Statistical Pool is made up of contracts financing medical equipment. The top four obligors have concentrations greater than 2.0% each, with the top obligor representing 8.0%. This obligor is a multi-state healthcare system with high investment-grade credit characteristics. The Statistical Pool is diversified geographically with the largest state, Florida, representing approximately 19.2% and all other states at less than 12.4% each. The Statistical Pool benefits from a weighted average obligor time in business of 22.1 years.

Dext ABS 2023-1 will issue five classes of notes. Credit enhancement is comprised of overcollateralization, a cash reserve, subordination benefiting senior classes and excess spread. The overcollateralization is subject to a target equal to 5.50% of the initial aggregate contract principal balance and is non-amortizing after reaching this target level. The reserve account is funded at 1.00% of the initial aggregate contract principal balance 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.

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