KBRA Assigns Preliminary Ratings to ABPCI Direct Lending Fund ABS IV LP
25 Mar 2024 | New York
KBRA assigns preliminary ratings to three classes of notes issued by ABPCI Direct Lending Fund ABS IV LP (“ABPCI IV”), a securitization backed by a portfolio of recurring revenue loans, middle market loans, and hybrid asset-based loans.
ABPCI IV is an approximate $300.0 million securitization managed by AB Private Credit Investors LLC (“ABPCI” or the “Collateral Manager”). The securitization consists of $192.0 million Class A notes, $30.0 million Class B notes, $18.0 million Class C notes, and $60.0 million of Subordinated Notes, which are expected to receive payments from the portfolio, consisting primarily 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.
The rated notes benefit from internal credit enhancement through subordination, borrowing base, and excess spread. KBRA determined a credit assessment for each asset in the initial portfolio. At closing, the portfolio is expected to have a K-WARF of 3579, which equates to a weighted average assessment between B- and CCC+. The overall credit quality of RRLs, which account for 74.4% of the portfolio, is generally lower than that of traditional MMLs.
ABPCI is an investment adviser and a subsidiary of Alliance Bernstein L.P., established in 2014. ABPCI’s direct lending platform has over $25 billion in gross commitments across over 550 transactions and $16 billion of capital available for investment. ABPCI currently manages approximately $5.6 billion in syndicated CLOs. As of December 2023, ABPCI has invested approximately $14.3 billion within the technology and software industry vertical.
KBRA’s preliminary ratings on the Class A-1, A-2, and B Notes considers timely payment of interest and ultimate payment of principal by the applicable stated maturity date. KBRA’s preliminary rating on the Class C Notes considers ultimate payment of interest and principal by the applicable stated maturity date.
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