KBRA Assigns Preliminary Ratings to NMEF Funding 2021-A

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to five classes of notes issued by NMEF Funding 2021-A, LLC (“NMEF 2021-A”). The notes are newly issued asset-backed securities (ABS) backed by a portfolio of equipment leases and loans. NMEF 2021-A represents North Mill Equipment Finance LLC’s (“North Mill” or the “Company”) fourth equipment ABS. North Mill is an independent equipment finance company created in 2012 when Colford Capital Holdings LLC acquired Equilease Financial Services (“Equilease”) and re-branded Equilease’s business as North Mill. Equilease had been founded in 1957 as a captive specialty finance company of Allied Capital. Under new management in 2017, North Mill implemented a two-part strategic change to its originations strategy. The strategy involved first, substantially pausing all originations and focusing on portfolio servicing and, second, shifting towards a more diversified asset profile. North Mill’s strategy aims to move away from a heavy reliance on long-haul trucking, to a more diversified collateral profile. Wafra Capital Partners acquired North Mill from Colford Capital Holdings LLC in August 2018.

NMEF 2021-A is backed by a pool of equipment loans and leases with a statistical discounted pool balance of $215.173 million based on a 4.25% discount rate. As of the initial cutoff date, the discounted contract value will be at least $227.6 million. The total collateral may increase up to $275 million through the addition of contracts during the three-month prefunding period. The pool is concentrated in transportation and construction contracts, however, it also includes 26% in medical equipment contracts. This is the first time that a North Mill equipment ABS will include a significant portion of non-transportation equipment contracts and is reflective of North Mill’s continued strategy to diversify originations. NMEF 2021-A will issue five classes of notes, including a short-term tranche. Credit enhancement includes excess spread, a reserve account, overcollateralization and subordination for senior classes.

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Related Publications

• General Global Rating Methodology for Asset-backed Securities
• Global Structured Finance Counterparty 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) is a full-service credit rating agency 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 pursuant to the Temporary Registration Regime. 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.

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