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KBRA Assigns Ratings to NSDL RN Feeder (Canada) LP

30 Jun 2026   |   New York

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KBRA assigns an A rating to the Class A Notes, a BBB rating to the Class B Notes, and a BB rating to the Class C Notes (together, the Notes) issued by NSDL RN Feeder (Canada) LP (the Issuer or the Feeder). This published rating report summarizes KBRA's analysis of the Notes and KBRA’s ratings address the Issuer’s ability to fulfill its obligations on the ultimate interest payment and ultimate repayment of the Notes’ principal by their legal final maturity.

Key Credit Considerations

  • Asset Coverage: The Class A Notes, Class B Notes, and Class C Notes have advance rates and maximum LTVs of 50.0%, 75.0%, and 87.5%, respectively.
  • Master Fund Asset Quality: The Master Fund’s assets are expected to predominantly comprise senior secured direct lending investments, including first lien and unitranche loans, to middle-market companies with annual EBITDA between $20 million to $80 million and an expected weighted average annual EBITDA of $75 million. KBRA has assumed an asset quality of ‘ccc+’ based on information provided by Northleaf Capital Partners (Canada) Ltd. (Northleaf), which is expected to be representative of the loans eligible for the Master Fund.
  • Transaction Structure: The transaction benefits from structural credit protections that support the assigned ratings, including initial overcollateralization and subordination across the capital structure, and projected excess spread available to absorb losses and performance triggers.
    • Excess Spread: KBRA considered information provided by Northleaf and its analysis of their corporate loan investments in the private credit platform. Based on recent originations, KBRA arrived at a weighted average spread assumption of 5.32% on the portfolio.
    • LTV Test: The priority of payments is structured with an LTV Test set at 88.5% through the Class C Notes. To the extent that there is a breach of the LTV Test, proceeds must be used to pay down the Class A Notes, followed by the Class B Notes, and the Class C Notes thereafter until the LTV is back in compliance.
    • Amortization Profile: The transaction utilizes a sequential priority of payments. During the Investment Period, available distributions are first applied to interest on the Notes and may be used to repay Notes to satisfy the LTV Test (88.5%). Otherwise, repayments may be made on a pro rata basis at the Manager’s discretion. Following the end of the Investment Period, after payment of fees and current and deferred interest, all remaining distributions are applied sequentially to repay the Class A Notes, followed by the Class B Notes and Class C Notes.
  • Final Portfolio Composition Dependent on Successful Ramp-Up: The Master Fund has an investment period of three years following the final closing date, during which Northleaf is expected to identify and deploy capital into investments consistent with its stated direct lending strategy. The ability to successfully ramp the portfolio to its targeted size and diversification may be influenced by market conditions, including competition within the direct lending market, broader credit market dynamics, economic downturns, or reduced transaction activity. If the portfolio does not ramp as anticipated and remains more concentrated than expected, obligor concentration and idiosyncratic risk could increase, potentially affecting default expectations, recovery outcomes, and ultimately the credit profile of the Notes. Northleaf maintains an established direct lending platform and intends to leverage the sourcing capabilities, underwriting processes, and portfolio management infrastructure of its broader private credit business. As of March 31, 2026, Northleaf’s senior secured flagship strategy has invested approximately $6.3 billion in corporate direct lending investments across more than 130 obligors.
  • Valuation: The Master Fund is expected to hold investments for which no public market exists, thus limiting price discovery. As a result, valuations of these investments are generally reliant on Northleaf’s valuation methodologies. Valuations are determined through ongoing credit monitoring, financial analysis, assessment of borrower performance, leverage and enterprise value considerations, and prevailing market conditions. Valuation conclusions are reviewed through Northleaf’s internal valuation governance process and are subject to annual review by the Fund’s independent auditors. To that extent, assigned values can differ from actual realized values if investments are liquidated.
  • Potential FX Risk: The Notes are denominated in US Dollars and reference Term SOFR. The underlying assets consist of direct senior secured loans to middle-market companies. The portfolio loans are expected to be denominated in various currencies, including but not limited to: USD, CAD, GBP, and EUR. As a result, the underlying assets may be exposed to FX risk. Northleaf has implemented an FX hedging policy to help mitigate this risk. While these arrangements are intended to mitigate foreign exchange risk, noteholders remain exposed to potential hedge costs, timing mismatches, counterparty risk, and imperfect hedge performance, which could impact cash flow generation.
  • Lack of Investment Restrictions: While the Master Fund benefits from certain portfolio construction parameters, including a maximum 10% exposure to any single portfolio company, a targeted portfolio of 40–55 obligors, a focus on senior secured first-lien and unitranche loans, and a 35% sector concentration guideline, the investment portfolio retains flexibility with respect to geography (though typically focuses on certain regions), currency exposure, and portfolio construction. As a result, the final portfolio may differ from KBRA’s initial assumptions regarding diversification, asset composition, and risk profile. Additional details regarding the Master Fund’s investment strategy, portfolio assumptions, and investment restrictions are discussed in the Master Fund Overview, Collateral Overview, and Master Fund Investment Restrictions sections of this report.
  • Manager Experience and Track Record: Northleaf Capital Partners (Canada) Ltd. is a global private markets investment firm focused on private equity, private credit, and infrastructure investments. Northleaf’s investment track record dates back to 2002, and the firm became independent in 2009. As of March 31, 2026, Northleaf had raised over $31 billion in commitments, employed approximately 300 professionals, and maintained ten offices globally, with its headquarters located in Toronto, Canada. Its investor base includes more than 375 institutional investors and family offices. The Northleaf Private Credit Program was established in 2016 and focuses on corporate direct lending and asset-based specialty finance investments in middle-market companies. As of March 31, 2026, the private credit platform had raised approximately $7.2 billion of commitments and employed more than 50 professionals across offices in Toronto, Chicago, London, and New York.

Rating Sensitivities

  • Increase in Asset Coverage: A significant reduction in Note leverage and/or a trend of Master Fund performance that exceeds current expectations may result in a positive rating change.
  • Underperformance of Master Fund Collateral: A rating downgrade may occur if the Master Fund collateral exhibits sustained underperformance, LTV increases, or sustained periods of deferrals of interest due to Noteholders. KBRA may additionally consider a downward rating revision if portfolio composition were to change, including changes in obligor concentration, sector exposure, lien mix, or geography.
  • Final Portfolio Composition Inconsistent with Expectations: KBRA’s expectations of the portfolio’s credit profile were based on an evaluation of the expected portfolio provided by Northleaf, the historical performance and composition of Northleaf’s direct lending platform, and other relevant factors. In the event the final portfolio does not reflect a similar size, diversity, yield, and credit profile as assumed, KBRA’s view of the asset quality of the underlying loans may change, which may impact the ratings assigned to the Notes.
  • Portfolio Margin Compression: The ratings are sensitive to a decline in the weighted average margin of the underlying loan portfolio. A reduction in loan spreads would reduce excess spread available to support noteholder payments and absorb losses. Given its position as the most subordinate rated tranche, the Class C Notes would be particularly vulnerable to sustained margin compression, which could exert downward pressure on the rating.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodology

Disclosures

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.

This credit rating is endorsed by Kroll Bond Rating Agency Europe Limited for use in the European Union and by Kroll Bond Rating Agency UK Limited for use in the UK. Information on a credit rating’s endorsement status is available on its rating page at KBRA.com.

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.

There are certain issuers, entities or transactions rated by KBRA Europe or KBRA UK that may be or have relationships with Shareholders and/or Shareholder-Related Companies, as that term is defined in KBRA’s Shareholder and Shareholder Related Companies for KBRA Europe and KBRA UK Policy and Procedure. Relevant disclosure information may be found here.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA 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. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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