KBRA Assigns Preliminary Ratings to VCP RRL ABS III, LLC
20 Feb 2024 | New York
KBRA assigns preliminary ratings to four classes of notes issued by VCP RRL ABS III, LLC (VCP III), a securitization backed by a portfolio of recurring revenue and middle market corporate loans.
VCP III is an approximate $500.0 million securitization managed by Vista Credit Partners, L.P. (“VCP” or the “Collateral Manager”), an investment adviser and affiliate of Vista Equity Partners (collectively, with these affiliates and other funds managed by them and their affiliates “Vista”). The securitization consists of $275.0 million Class A Notes, $50.0 million Class B Notes, $50.0 million Class C Notes, $25.0 million Class D Notes, and $96.2 million of Subordinated Notes, which expect to receive payments from a portfolio of recurring revenue loans (“RRLs”) and middle market loans (“MMLs”). The reinvestment period is approximately two years from the closing date. The ratings reflect initial credit enhancement levels, excess spread, and structural features.
This is VCP’s third securitization collateralized predominately by RRL and MML. The RRL strategy focuses on first-lien senior loans to technology and software companies that have a minimum level of recurring revenue and low loan-to-value (LTV) ratios. VCP views the RRLs strategy as a complement to its middle market business and an extension of core competencies in the technology and software industries.
The Class A, B, C and D Notes have an advance rate of 55.0%, 65.0%, 75.0% and 80.0%, respectively. The overall K-WARF of the portfolio is 3697, which represents a weighted average portfolio assessment between B- and CCC+. The portfolio presented to KBRA contains exposures to 38 obligors with approximately 75.2% of the par exposed to RRLs. The transaction has an approximate 0.75-year reinvestment period during which the initial portfolio may experience turnover through trading and substitution.
KBRA’s ratings on the Class A and Class B Notes consider timely payment of interest and ultimate payment of principal by the applicable stated maturity date, and KBRA’s ratings on the Class C and Class D Notes consider ultimate payment of interest and principal by the applicable stated maturity date.
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