DBRS Withdraws and Assigns New Provisional Ratings to Two Classes of LEAF Receivables Funding 12, LLC – Equipment Contract Backed Notes, Series 2017-1

DBRS, Inc. (DBRS) has today discontinued and withdrawn existing provisional ratings for the following two classes of notes to be issued by LEAF Receivables Funding 12, LLC – Equipment Contract Backed Notes, Series 2017-1 (the Notes):

-- $13,893,000 Class E-1 rated BBB (sf)
-- $11,578,000 Class E-2 rated BB (sf)

DBRS has simultaneously assigned new provisional ratings to the following classes of Notes:

-- $13,893,000 Class E-1 rated BBB (high) (sf)
-- $11,578,000 Class E-2 rated BB (high) (sf)

The assignment of new provisional ratings is consistent with the cash flow modeling assumptions for the respective rating categories. The new provisional ratings for Classes E-1 and E-2 also consider additional information received from LEAF Commercial, Inc. (LEAF Commercial) with respect to the historical static pool performance of additional key equipment type categories. The additional static pool performance data affirm the analysis previously conducted by DBRS and provide additional analytical support to the assignment of the respective new provisional ratings to the Class E-1 and E-2 Notes.

The ratings are based on DBRS’s review of the following analytical considerations:
-- Form and sufficiency of available credit enhancement and its ability to withstand the expected losses under various stressed cash flow modeling scenarios.
-- The transaction parties’ capabilities with regard to origination and servicing.
-- The credit quality of the collateral pool and the historical performance of the LEAF Commercial portfolio.
-- The legal opinions, which will address the true sale of the assets, non-consolidation of the Issuing Entity, that the Issuing Entity has a valid first-priority security interest in the assets and the consistency with the DBRS “Legal Criteria for U.S. Structured Finance” methodology.

The Notes are issued in nine classes — Classes A-1, A-2, A-3, A-4 Notes (the Class A Notes), Class B Notes, Class C Notes, Class D Notes, Class E-1 Notes and Class E-2 Notes — the respective interest and principal payments on which will be made in sequential order of seniority. Thus, the initial hard credit enhancement for the Class A-1 Notes of 76.5% will include the Class A-2 (25.5%), A-3 (23.0%) and A-4 (6.8%) Notes, the Class B Notes (4.0%), the Class C Notes (3.9%), the Class D Notes (2.8%), the Class E-1 Notes (3.9%), the Class E-2 Notes (3.3%); funds on deposit in a fully funded and non-declining Reserve Account (1.50%); and overcollateralization (OC; 1.75%). The corresponding initial hard credit enhancement for the Class A-2, Class A-3, Class A-4, Class B, Class C, Class D and the Class E-1 Notes will be 51.0%, 28.0%, 21.2%, 17.1%, 13.2%, 10.4% and 6.5%, respectively. The initial Class E-2 credit support of 3.25% will comprise the Reserve Account and OC. Additional credit support may be provided from excess spread available in the structure. Subject to availability of funds and priority of payments, the OC will build to 6.00% of the Aggregate Asset Balance with a floor of 2.00% of the Initial Aggregate Asset Balance.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating U.S. Equipment Lease and Loan Securitizations, which can be found on dbrs.com under Methodologies.

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.

The full report providing additional analytical detail is available by clicking on the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.