KBRA Assigns Preliminary Ratings to Golub Capital Partners ABS Funding 2024-2
19 Jul 2024 | New York
KBRA assigns preliminary ratings to four classes of debt issued by Golub Capital Partners ABS Funding 2024-2 ("GCPAF 2024-2"), a securitization backed by a portfolio of recurring revenue and middle market corporate loans.
GCPAF 2024-2 is a loan securitization managed by GC Investment Management LLC (“GCIM” or the “Collateral Manager”), an investment adviser and affiliate of GC Advisors LLC (collectively, with these affiliates and other funds managed by them and their affiliates “Golub Capital”). The securitization consists of $227.5 million Class A notes, $31.5 million Class B notes (collectively the “Notes”), and $91.0 million Subordinated Notes, which expect to receive payments from the portfolio of recurring revenue loans (“RRLs”) and middle market loans (“MMLs”). Proceeds from the issuance of the notes will be used to purchase assets (approximately $350.0 million).
This is Golub Capital’s tenth 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. Golub Capital 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 rated notes benefit from internal credit enhancement through subordination, borrowing base, and excess spread. The Class A and B Notes have a 65.0% and 74.0% advance rate respectively and are expected to receive timely interest and ultimate principal under KBRA’s rating scenarios. KBRA determined a credit assessment for each asset in the initial portfolio. At closing, the portfolio is expected to have a K-WARF of 3492, which equates to a weighted average assessment between B- and CCC+. The overall credit quality of RRLs, which account for 69.4% of the portfolio, is generally lower than that of traditional MMLs.
Kroll Bond Rating Agency’s (KBRA) ratings on the Class A-1, Class A-2 (collectively, “Class A”), Class B-1, and Class B-2 Notes (collectively, “Class B”) consider the timely payment of interest and ultimate payment of principal by the applicable stated maturity date. KBRA’s analysis as presented herein assumes the Class B Notes are floating. KBRA’s analysis also considered fixed-rate Class B Notes.
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