OREANDA-NEWS. S&P Global Ratings today assigned its 'BBB+ (sf)' rating to Engenium Capital Equipment Dollar Trust's $340.5 million asset-backed notes due in 2026.

The note issuance is an asset-backed securities transaction backed by a revolving pool of equipment leases denominated in U. S. dollars.

The rating reflects: Initial credit enhancement in the form of overcollateralization (O/C) of 23.80%, calculated as 1 – (liabilities/assets). Excess flows derived from the fact that the trust will purchase the receivables at their net present value with a discount rate of 6.5%.An interest reserve funded upfront, enough to cover up to three months of interest, which could mitigate liquidity risk. The transaction's payment structure, which, during the revolving period, would retain the collection proceeds net of expenses and interest in a fund to purchase new receivables or to amortize the notes outstanding balance after the revolving period to maintain the O/C at its target level. The transaction's eligibility criteria, which, in our view, mitigate the risk that the pool's characteristics change substantially. The concentration limits per obligor and industry included in the transaction documents, which we consider consistent with the level of credit enhancement for the assigned rating level. The early amortization events and events of default included in the transaction that, if breached, may prevent the release of remaining amounts to the originators. A cash accumulation event that, if triggered, would allocate excess cash in the trust to amortize the outstanding principal on the notes. The transaction's legal structure, which constitutes a true sale of the assets through a trust agreement and several contribution agreements, isolating the pledged assets from the originators' credit risk to a bankruptcy-remote entity that we consider unlikely to be subject to a bankruptcy procedure under our criteria. The transaction's ability to withstand maximum losses consistent with the 'BBB+ (sf)' rating level. Engenium Capital's operational capabilities, which, after applying our criteria, result in a maximum potential rating consistent with the assigned rating.