KBRA assigns preliminary ratings to three classes of notes issued by Service Experts Issuer 2023-1 (“SE 2023-1”), a $299.151 million consumer lease ABS transaction. The preliminary ratings reflect initial credit enhancement level of 22.30% for the Class A notes, 16.90% for the Class B notes and 12.10% for the Class C notes. Credit enhancement consists of overcollateralization, excess spread, a cash reserve account and subordination (except for the Class C notes).

This transaction represents the second ABS securitization for Advantage Experts Services LLC, d/b/a Service Experts, (“Advantage Experts” or the “Company”) and is collateralized by a pool of residential retail lease contracts and agreements used to finance heating, ventilation and air conditioning (HVAC) units, water treatment or similar equipment, water heating equipment and related maintenance contracts. The Company issued its inaugural ABS securitization, Service Experts Issuer 2021-1, in 2021.

Advantage Experts is a provider of HVAC and water heater equipment and services to both residential and light commercial customers across the U.S. and Canada. Prior to October 2022, the Company originated contracts through its various subsidiaries and affiliates, including Service Experts LLC. As part of a corporate reorganization, Advantage Experts assumed all originations under the Advantage Program in October 2022 and such contracts have since been originated by Advantage Experts. Advantage Experts is a holding company where management, underwriting and servicing personnel are employed under the Service Experts subsidiary.

KBRA applied its General Global Rating Methodology for Asset Backed Securities, as well as its Global Structured Finance Counterparty Methodology and ESG Global Rating Methodology as part of its analysis of the portfolio pool data, underlying collateral pool and capital structure. KBRA also conducted an operational assessment of Advantage Experts, as well as a review of the transaction’s legal structure and transaction documents. Operative agreements and legal opinions will be reviewed prior to closing.

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Related Publications

• 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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