KBRA Assigns Preliminary Ratings to SCF Equipment Leasing 2025-2 ABS Transaction
Kroll Bond Rating Agency, LLC (KBRA) has assigned preliminary ratings to eight classes of notes that will be issued by SCF Equipment Leasing 2025-2 LLC and SCF Equipment Leasing Canada 2025-2 Limited Partnership (together referred to as SCF 2025-2). The transaction represents another milestone in the continued issuance activity of Stonebriar Commercial Finance LLC (SCF), a leading provider of equipment financing solutions across a wide range of essential-use asset industries.
This securitization is part of SCF’s ongoing funding strategy within the equipment asset-backed securities (ABS) market. SCF 2025-2 marks the 14th equipment ABS transaction sponsored by the company. The transaction structure and collateral characteristics reflect SCF’s established history in originating, servicing, and managing large-scale commercial equipment financing portfolios.
Background on the Sponsor and Asset Originator
SCF is a privately held commercial equipment finance company headquartered in Plano, Texas, founded in 2015. Since inception, the company has focused exclusively on providing secured financing solutions to middle-market and large corporate borrowers across North America. These financings are primarily backed by essential-use equipment—assets that are critical to a company’s daily operations and production capabilities.
As of June 30, 2025, SCF had:
- Funded approximately $16.0 billion in total originations across loans and leases.
- Maintained an owned portfolio valued at approximately $5.7 billion.
- Originated and serviced equipment financing across industries including transportation, marine, rail, manufacturing, healthcare, energy, and industrial infrastructure.
The company operates both in the United States and Canada through its affiliate Stonebriar Commercial Finance Canada Inc. (SCF Canada). All contracts included in SCF 2025-2 were either directly originated by SCF or indirectly originated through SCF Canada, ensuring consistency in underwriting standards, servicing practices, and portfolio oversight.
In addition to its role in originating and sponsoring ABS transactions, SCF currently services the Granite Park 2023-1 equipment ABS transaction, demonstrating ongoing experience and capacity as both an issuer and servicer in the structured finance market.
Overview of the SCF 2025-2 Transaction
The collateral backing the SCF 2025-2 transaction consists of:
- Equipment lease and equipment loan contracts collectively referred to as the Contracts.
- Interests in the physical equipment securing those contracts.
- Portfolio interest certificates that represent 100% beneficial ownership in a dedicated pool of titled vehicle leases and related assets.
The financed equipment within the portfolio primarily comprises essential-use assets, meaning the equipment plays a critical role in the continued operations of the contract obligors. These assets span:
- Marine vessels and transport equipment
- Rail and locomotive equipment
- Energy sector production and power generation assets
- Medical and healthcare technology
- Manufacturing machinery and industrial production equipment
Essential-use assets historically exhibit strong performance and stability, particularly under stressed economic conditions, because obligors have clear operational incentives to continue making payments to retain use of the equipment.
Portfolio Composition and Credit Characteristics
The initial aggregate discounted contract balance (Initial ADCB) of the portfolio securing SCF 2025-2 is approximately $972.56 million, based on valuation dates defined for each group of contracts:
- Initial contracts valued as of September 30, 2025
- One specific additional contract valued as of October 31, 2025
- Remaining additional contracts valued as of December 31, 2025
The ADCB reflects discounted expected payments on the leases and loans, including estimated residual values of equipment at contract maturity, and is discounted based on each contract’s internal rate of return (IRR).
Key portfolio statistics include:
| Metric | Value |
|---|---|
| Number of Contracts | 44 |
| Number of Obligors | 33 |
| Weighted Average IRR | 9.92% |
| Average Contract Size | ~$22.10 million |
| Average Exposure per Obligor | ~$29.47 million |
| Largest Single Obligor Exposure | ~$98.15 million (10.09% of Initial ADCB) |
The obligor base is moderately concentrated, meaning that while diversification exists, large individual exposures remain a key credit consideration. However, obligors generally represent established mid-market and large corporate borrowers, often with significant operational dependence on the financed equipment.
Transaction Structure and Credit Enhancement
SCF 2025-2 will issue eight tranches of notes, including a short-term money market tranche. The securitization incorporates several forms of credit enhancement, designed to protect senior-note investors and absorb losses prior to affecting higher-rated tranches:
- Overcollateralization – the value of collateral exceeds note balances.
- Excess Spread – the difference between interest received on the portfolio and interest paid to investors.
- Reserve Account – available funds maintained to support cash flow stability.
- Subordination – lower-rated tranches absorb losses before senior classes.
The structure also contains an acquisition account, pre-funded at closing, allowing the issuer to acquire 16 additional contracts during a defined Transfer Period (up to the second payment date), subject to conditions including no events of default and confirmation standards for replacement collateral.
Methodologies and Rating Considerations
KBRA’s preliminary ratings reflect analysis under the agency’s established frameworks, including:
- Equipment Lease & Loan ABS Global Rating Methodology
- Global Structured Finance Counterparty Methodology
- ESG Global Rating Methodology
Key areas of analytical focus include:
- Performance characteristics of essential-use collateral
- Obligor concentration levels
- Residual value and asset recovery assumptions
- SCF’s servicing strength and underwriting history
- Structural resilience under stress and sensitivity scenarios
Detailed sensitivity analysis, ESG considerations, and full rating rationales are available in the complete rating report.
- Full rating report: Available through KBRA’s official website
- Information disclosure forms: Available via transaction page
- Rating category definitions: Accessible via KBRA’s rating scale documentation
The SCF Equipment Leasing 2025-2 transaction highlights SCF’s continued role as a significant and experienced issuer within the equipment ABS market. With essential-use collateral, a disciplined underwriting framework, continued servicing stability, and structural credit enhancement supporting investors across the capital stack, the securitization reinforces the company’s standing in the commercial equipment finance and structured credit sectors.
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