Summary
This document describes KBRA’s methodology for rating North American railcar lease securitizations, which are asset-backed securitization (ABS or Railcar ABS) transactions collateralized by railcar assets. Railcar ABS transactions generally relate to a portfolio of underlying railcars, including freight and tank cars, that are typically leased by railcar leasing companies (lessors) to logistics companies and others (lessees) to transport raw materials and goods to manufacturing facilities or other locations. A railcar lessor is also typically the servicer on Railcar ABS transactions and is therefore responsible for overseeing maintenance, collecting lease payments, managing delinquencies, defaults and repossessions, and re-leasing or selling the collateral. The primary sources of a Railcar ABS’s cash flow are: (i) the initial and subsequent leases which are typically payable monthly according to the applicable lease terms and (ii) proceeds from the eventual sale or liquidation…