NEW YORK–(BUSINESS WIRE)–Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to six classes of BCC Funding XVII LLC, Series 2020-1, an equipment loan and lease securitization. BCC Funding XVII LLC will issue six classes of notes, including a short-term class A-1 tranche. The transaction represents the seventh equipment asset-backed securities transaction sponsored by Balboa Capital Corporation, following issuances in each of 2007 (which benefited from bond insurance), 2014, 2015, 2016, 2018 and 2019. Balboa Capital Corporation, founded in 1988 and headquartered in Costa Mesa, CA, is an independent equipment finance company that originates loans and leases for diversified types of equipment to small and medium businesses.
The transaction’s 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 9.5% of the current pool balance and a floor equal to 2.0% of the initial pool balance. The reserve account is funded at 1.5% of the initial pool balance and is non-amortizing.
As of September 30, 2020, the pool of equipment contracts backing the transaction has a discounted pool balance of $170.66 million, based on a 4.45% discount rate. During the three months following closing, funds in the prefunding account may be used to purchase up to approximately $41 million in discounted contract balance of new receivables, subject to eligibility criteria and concentration limits.
- Equipment Lease & Loan Global ABS Rating Methodology
- Global Structured Finance Counterparty Methodology
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 U.S. Information Disclosure Form 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 U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. 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 and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA.
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