KBRA Assigns Preliminary Ratings to ServiceMaster Funding LLC, ServiceMaster of Canada Limited, Series 2021-1 Senior Secured Notes
Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two classes of notes from ServiceMaster Funding LLC, ServiceMaster of Canada Limited, Series 2021-1, a whole business securitization (WBS).
This transaction is the second WBS issued by ServiceMaster Funding LLC (the "Issuer") and its subsidiaries and ServiceMaster of Canada Limited (the "Canadian Co-Issuer", and together with the Issuer, the "Co-Issuers"). In connection with its first securitization transaction in 2020, ServiceMaster Opco Holdings LLC and certain of its affiliates contributed substantially all of its revenue-generating assets to the Co-Issuers as collateral for the Existing Notes. The transaction collateral includes existing and future domestic and international franchise and regional distribution agreements, royalties and profits from company-operated locations, product and equipment sales, franchisee notes, other franchisee fees and intellectual property.
ServiceMaster Brands ("ServiceMaster", "SMB" or the "Company") is a leading provider of restoration and cleaning services to commercial and residential customers across all 50 states and ten countries. SMB's platform consists of ServiceMaster Restore (restoration), ServiceMaster Clean (commercial cleaning), Merry Maids (residential cleaning), Furniture Medic (cabinet and furniture repair), AmeriSpec (home inspection), and upon the completion of the acquisition, Two Men and a Truck (moving and junk removal). SMB serves both residential and commercial customers in the US through a network of 2,624 global locations and 2,125 franchisees as of March 31, 2021 ("Q1 2021"). For the twelve months ending Q1 2021 ("LTM Q1 2021"), the system generated system sales of approximately $3.2 billion. The system is approximately 99.7% franchised.
In conjunction with the issuance of the Series 2021-1 Class A-2 Notes, KBRA anticipates affirming the ratings on the Co-Issuers' outstanding Series 2020-1 Class A-1 Notes, Series 2020-1 A-2-I Notes and the Series 2020-1 A-2-II Notes (the "Existing Notes", and together with the Series 2021-1 Class A-2-I Notes and Series 2021-1 Class A-2-II-Notes, the "Notes"). The ratings are consistent with the results of our cash flow scenarios following the addition of the Series 2021-1 Class A-2 Notes.
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.
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 pursuant to the Temporary Registration Regime. 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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