KBRA Assigns Preliminary Ratings to VFI ABS 2025-1, LLC - Equipment ABS Transaction

KBRA assigns preliminary ratings to four classes of notes issued by VFI ABS 2025-1, LLC, an equipment ABS transaction. The transaction is backed by a pool of equipment contracts with a discounted receivable balance of $202.09 million. Credit enhancement is provided through overcollateralization, a cash reserve, capitalized interest, subordination, and excess spread. The ratings are based on the company's consistent underwriting policy, managed portfolio, and credit enhancement mechanisms.

Kroll Bond Rating Agency (KBRA) has assigned preliminary ratings to four classes of notes issued by VFI ABS 2025-1, LLC, an equipment ABS transaction. The transaction is backed by a pool of equipment contracts with a discounted receivable balance of $202.09 million. Credit enhancement is provided through overcollateralization (O/C), a cash reserve, capitalized interest, subordination, and excess spread. The ratings are based on the company's consistent underwriting policy, managed portfolio, and credit enhancement mechanisms.

Varilease Finance, Inc. (VFI), the originator and servicer of the transaction, is an independent equipment finance company focused on leasing industrial and commercial equipment to upper- and middle-market businesses. VFI 2025-1 represents the Company’s third equipment ABS transaction. As of June 30, 2025, VFI’s servicing portfolio in the U.S. is approximately $634 million. The company has grown its managed portfolio while employing a consistent underwriting policy.

The pool of equipment contracts backing VFI 2025-1 (Statistical Pool) has an aggregate discounted receivable balance of $202.09 million, 98 receivables, and 81 obligors. Credit enhancement mechanisms include overcollateralization, a cash reserve, a capitalized interest account, subordination benefiting senior classes, and excess spread. The O/C is subject to a target equal to 4.70% of the current pool balance and a floor equal to 1.25% of the initial pool balance. The reserve account is funded at 1.50% of the initial note balance (1.46% of the pool balance as of the initial cut-off date) and is non-amortizing.

The preliminary ratings assigned by KBRA reflect the company's strong underwriting policy and the robust credit enhancement mechanisms in place. Investors should review the full rating report for detailed information on key credit considerations, sensitivity analyses, and ESG factors that may affect these ratings.

References:

[1] https://www.morningstar.com/news/business-wire/20250808835897/kbra-assigns-preliminary-ratings-to-vfi-abs-2025-1-llc
[2] https://www.businesswire.com/news/home/20250808835897/en/KBRA-Assigns-Preliminary-Ratings-to-VFI-ABS-2025-1-LLC