KBRA maintains ratings on bonds and loans issued by more than 85 feeder funds that invest in middle market and other private credit strategies. Against a backdrop of continued growth in feeder fund rated note issuance, this KBRA report provides an overview of the key legal features observed in KBRA-rated transactions. The report focuses on feeder fund rated notes, but many of the considerations are relevant to other rated note structures such as general partner-led collateralised fund obligations.
Key Takeaways
- The legal documents that govern feeder fund rated notes present a range of nuanced legal and credit considerations, which makes a detailed legal review an essential part of the ratings process.
- Much of the complexity arises because the feeder fund participates in the underlying credit assets through a limited partnership interest (LP interest) in a master fund. An analysis that does not recognise the tension that exists between the standards and documentation…