Channel Partners Sponsors Second Equipment Lease

Channel Partners Capital continues its inaugural asset-backed securitization (ABS) deal with a $162.8 million transaction, again secured by small business loans and corporate cash advances. Proceeds from the transaction, CP EF Asset Securitization I, Series 2022-1, will help support its small business finance business.

Founded in 2009 to provide point-of-sale working capital financing to small businesses, Channel Partners launched its own financing offering in 2020, according to ratings agency Kroll Bond.

The company sources from partners who otherwise could not fund them. The securitization portfolio consists of originations exceeding the risk-based portfolio concentration limits for its partner companies, originations that do not match a partner’s credit strategy and broker originations.

Truist Securities and Regions Securities are the first buyers of the agreement, which will issue the notes across three classes. The Class A and Class B ratings of CP EF Asset Securitization, 2022-1, will benefit from subordination levels of 15.1% and 3.5%, respectively.

Otherwise, the notes also benefit from overcollateralization and a reserve account funded at 1% of the original pool balance at closing and non-amortizable, according to the KBRA. The reserve account will increase as a percentage of the current pool balance over time.

The deal also has an excess spread of around 1.12% per year. CP EF Asset Securitization I Series 2022-1 will have a pre-funding period of approximately three months after the closing date, towards the end of the month.

KBRA plans to assign ratings ranging from “A” on the $134.8 million Class A Notes to “BB” on the $6.4 million Class C Notes.

According to the KBRA, approximately 2,954 contracts will secure the securitization of CP EF I assets, series 2022-1, on a discounted pool balance, they average $49,981. On a weighted average (WA) basis, the contracts had an initial term of 55 months and an average maturity of seven months.

The pool is very diverse, with the top obligor accounting for 0.13% and the top five accounting for 0.61%, KBRA said. Considered by State, the diversification remains constant. Texas accounts for the highest percentage at 12.5% ​​and California at 12.3%. Florida, Georgia and Illinois represent 9.4%, 5.1% and 3.6% of the pool respectively.

The majority of equipment types in the agreement were ‘other means of transport’, at 16.1%; construction, 15.0%; trucking, at 14.5%; general equipment categories, at 13.5% and trailers, at 10.8%, the rating agency said.

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