KBRA assigns preliminary ratings to four classes of notes issued by Blue Bridge Funding 2023-1 LLC (Blue Bridge 2023-1) an equipment ABS transaction.

Blue Bridge 2023-1 represents Blue Bridge Financial, Inc.’s (Blue Bridge or the Company) first ABS transaction. Blue Bridge is an independent finance company providing small and medium-sized businesses with secured loans and leases for revenue-producing, essential-use equipment. Founded in 2009, Blue Bridge originally employed an originate to sell strategy. Buttonwood Capital Management made a majority investment in the Company in 2014. Under new management, Blue Bridge moved to an originate to hold strategy and has originated over $700 million and has portfolio net investment outstanding of $239.16 million as of third quarter 2023. Blue Bridge originates through two channels: referrals from brokers and other independent sales organizations (Broker/ISO) and, more recently, directly to end users and vendors (Vendor/Direct). Vendor/Direct originations began in third quarter 2021 and the majority of originations continue to flow from the Broker/ISO channel.

The discounted pool balance represents the discounted value of the projected cash flows of the contracts included in the collateral pool using a discount rate based on the interest rate on the notes plus fees and other amounts. As of October 31, 2023, based on a discount rate of 9.25%, the discounted pool balance is $136.92 million (Statistical Pool). As of the initial cutoff date (November 30, 2023) the discounted pool balance will be at least $133.76 million.

Blue Bridge 2023-1 will issue four classes of notes. Credit enhancement includes excess spread, a reserve account, overcollateralization and subordination for senior classes. The overcollateralization is subject to a target equal to 12.50% of the current pool balance and a floor equal to 0.50% of the initial pool balance. The reserve account is funded at 1.00% of the initial pool balance and is non-amortizing.

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Related Publications

• ABS General Global Rating Methodology for Asset-backed Securities
• Global Structured Finance Counterparty Methodology
• ESG Global Rating 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. 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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