KBRA Affirms Rating for HG Global Ltd.
28 Mar 2025 | New York
KBRA affirms the issuer rating of BBB- for HG Global Ltd. ("HG Global") and the long-term credit rating of BBB for the $150 million Senior Secured Term Loan. The Outlook for both ratings is Stable.
The Term Loan (the “Loan”) is secured by a first-priority interest in the capital stock of HG Holdings Ltd. (“HG Holdings”), a wholly-owned subsidiary of HG Global Ltd. (“HG Global”). HG Holdings has access to (i) all accrued interest on Build America Mutual’s (“BAM”) surplus notes held outside of the collateral trusts and (ii) all releases of excess funds from the collateral trusts at its wholly owned reinsurance subsidiary, HG Re Ltd. (“HG Re”). The transaction requires the maintenance of an Interest Reserve Account containing eight quarters of interest payments, which serves as a liquidity buffer at the HG Global level to cover potential timing mismatches from available cash flows and debt service on the Loan. Additionally, HG Global has a $25 million inter-company borrowing facility to support short-term liquidity needs.
KBRA’s rating is based on the transaction structure and a detailed quantitative assessment of BAM’s insured portfolio and projected cash flows to HG Global. Factors such as new business volume, refunding activity, and the credit risk of BAM’s insured exposures influence HG Global’s ability to meet debt service obligations.
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