Linklease (‘LL”) is an operating lease Company who serves SMEs across the MENA region with traditional sources of equipment finance. LL cater to a broad range of industries including healthcare, logistics, manufacturing, printing and construction to name just a few With over 25 years of specialist experience in SME asset-based financing, the team has delivered deals to the tune of $USD1 billion across more than 3,500 transactions.
Linklease Finance PLC
The bond was issued by a separate legal entity, Linklease Finance Plc, structured by Zenzic partners (http://www.zenzicpartners.com), Authorised and regulated by the Financial Conduct Authority, as opposed to LL themselves specifically because this was not intended to be a typical corporate bond. Linklease Finance Plc is a vehicle specifically set up to issue debt and is bankruptcy remote, in order to divorce the risk of the sponsor from the risk of the bond issuer, which is very common for this type of securitisation:
If LL had issued the bond as a corporate bond, investors would be relying on the creditworthiness of LL as a company, as most traditional corporate bonds represent unsecured debt. For example, when Apple issue debt investors are relying on the credit rating of Apple because the bond is not secured against any assets hence why the credit rating of the issuer is paramount. In the case of this bond, it is issued by Linklease Finance PLC but is secured against assets so that in the event of default there is something the independent trustees, to whom the assets will be pledged, can potentially sell in order to repay bondholders. Bondholders have zero direct exposure to LL’s financial performance.
The security will be freely transferable and is traded daily from 9am to 5pm, Monday – Friday, in compliance with the Listing Rules of the TISE/Frankfurt Stock Exchange. It also has liquidity built in for redemptions with no exit charge. This is be specified within the IM
The Bond is asset-backed and has security over a designated pool of leases originated and managed by the servicer and lease originator. The security is governed by and enforceable under English Law and assets are pledged to the trustee, Woodside Corporate Services, under a secure trust structure.
ARC Ratings, S.A. (ARC Ratings) has accorded an indicative, medium-term public rating of ‘A(sf)(ind)’ to the Series 2018-LL1 Senior Secured Notes to be issued by Linklease Finance PLC, with stable outlook. The indicative rating accorded refers to ultimate repayment of principal and timely repayment of interest.
ARC has been accorded the same mappings standards as the S&P, Fitch and Moody’s (“big 3”) CRAs by the European Commission, therefore, ARC’s ratings can be used for capital relief purposes under the standardised and ratings-based approach, as well as under Solvency II. Effectively all this means that an ARC rating should be regarded alongside the big 3. For further information on ESMA and to see ARC listed alongside the big 3, please view this link: https://www.esma.europa.eu. Furthermore, the chief analyst on this particular rating, Emma-Jane Fulcher, was a Senior Director at Fitch for more than a decade.
ARC rating was chosen over the big 3 because of cost mainly which is, of course, related to the size of the issue (150/200k cost just not economical on 50m issue)