KBRA assigns preliminary ratings to six classes of notes issued by Post Road Equipment Finance 2025-1, LLC (PREF 2025-1), an equipment ABS transaction.

PREF 2025-1 represents the fourth equipment ABS transaction sponsored by Post Road Equipment Finance, LLC (PREF or the Company). Founded in 2017 and headquartered in Westport, Connecticut, PREF is an independent equipment finance company focused on financing discrete revenue-producing essential-use medium- and large-ticket equipment to corporate obligors. The Company was formerly known as Encina Equipment Finance, LLC and changed its name in March 2023 to Post Road Equipment Finance, LLC. The PREF 2025-1 transaction is secured by a portfolio of equipment lease and loan contracts. The underlying contracts are collateralized by medium- and large-ticket equipment in a variety of industries such as manufacturing, transportation and warehousing, healthcare and social assistance, and waste management and remediation services, amongst others. PREF 2025-1 will issue six classes of notes, including a short-term money market tranche (the Notes) totaling $406.1 million. The Notes benefit from credit enhancement in the form of overcollateralization, excess spread, a reserve account, and subordination for senior classes.

The securitization value of the portfolio is approximately $445.8 million as of December 31, 2024 (Cut-off Date). The securitization value is, for the fixed rate contracts, 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 lease rate or interest rate and, for the floating rate contracts the principal balance of the contract. The weighted average yield of the underlying contracts is approximately 10.49%. The portfolio is comprised of 170 contracts to 67 obligors. The average contract balance is approximately $2.62 million and the average exposure to an obligor is approximately $6.65 million. The collateral is comprised of 55.15% loans and finance leases, and 44.85% true leases. The weighted average original and remaining contract terms are 56 months and 45 months, respectively. The maximum exposure to an obligor is approximately $29.39 million or approximately 6.59% of the securitization value.

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Methodologies

  • Structured Finance: Global Structured Finance Counterparty Methodology
  • ABS: Equipment Lease & Loan ABS Global Rating 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), one of the major credit rating agencies (CRA), is a full-service CRA 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 (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1007699

Analytical Contacts

Joanne DeSimone, Managing Director, ABS Commercial (Lead Analyst) +1 646-731-2306 joanne.desimone@kbra.com

Richard Jackson, Director +1 646-731-1446 richard.jackson@kbra.com

Zachary Lee, Analyst +1 646-731-1252 zachary.lee@kbra.com

Kenneth Martens, Senior Director (Rating Committee Chair) +1 646-731-3373 kenneth.martens@kbra.com

Business Development Contact

Arielle Smelkinson, Senior Director +1 646-731-2369 arielle.smelkinson@kbra.com