ABS: Whole Business Securitization (WBS) ABS Global Rating Methodology

Summary

This document sets forth Kroll Bond Rating Agency, LLC and its rating affiliates’ (collectively, “KBRA”) methodology for rating Whole Business Securitizations (WBS), which are transactions collateralized by substantially all of a company’s revenue-generating assets.

Initially, the WBS market consisted mostly of large franchise restaurant concepts. However, the sector has evolved to include non-restaurant franchise concepts and non-franchised companies with predictable cash flows. A typical WBS issuer is a company that has a higher likelihood of business continuity without substantial disruption of operations in the event of economic stress or company bankruptcy. Resiliency in these scenarios depends heavily on the ability for the underlying business to continue generating cash flows to service the WBS debt. This would usually be reflected in the strength, durability, and relatively low operational complexity of the underlying business, as well as the quality of the collateral…