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KBRA Affirms All Ratings for Glendower Capital Secondaries CFO, LLC

6 Jul 2026   |   New York

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KBRA affirms the ratings on the Class A, Class B, and Class C Loans (collectively, the "Rated Debt") issued by Glendower Capital Secondaries CFO, LLC (the "Issuer"). The outlook on these ratings remains Stable. This decision is based on KBRA's assessment of the transaction and investment performance reports.

The transaction entered its amortization phase in January 2025, leading to deleveraging of the Class A Loans and a corresponding improvement in asset coverage across the Rated Debt. Since issuance, the underlying portfolio composition, asset performance, and debt repayment activity have generally performed in line with KBRA’s expectations. Although distributions have been slower than initially projected, collateral quality and LTV metrics have remained stable. KBRA has affirmed its ratings and maintained Stable outlooks, reflecting the transaction’s improved asset coverage and overall credit profile, which continue to support the current rating levels.

Key Credit Considerations

  • Asset Coverage: At close, the Class A Loans, Class B Loans, and Class C Loans were drawn on a pro-rata basis at advance rates of 50.0%, 65.0%, and 75.0%, respectively. This equated to an asset coverage of 200.0% (50.0% LTV), 153.8% (65.0% LTV), and 133.3% (75.0% LTV), respectively. As of March 31, 2026, the asset coverage on the Class A Loans, Class B Loans, and Class C Loans were 236.4%, 171.2% and 144.7%, respectively.
  • Transaction Structure: The transaction considers a number of key structural features, further described below:
    • Borrower Reserve Account: The Issuer will maintain a Borrower Reserve Account which will be funded from available funds to a target amount equal to:
      • From January 2025 and prior to the Class C Repayment date, the sum of: (i) The greater of: (x) Projected interest expense on the Rated Debt for the following 12-month period or (y) 40.0% multiplied by the remaining unfunded commitments of the Borrower to the Underlying Funds; and (ii) Any additional amount determined by the Manager in its reasonable discretion as being required to meet the Borrower’s capital needs and expenses on the following Payment Date. As of March 31, 2026, the Borrower Reserve Account totaled $13.3 million, equivalent to 40% of the remaining unfunded commitments.
    • LTV Trigger and Minimum NAV Test: The structure benefits from an LTV Test, which accelerates cash sweeps to the extent the LTV exceeds 50% for the Class A Loans, 65% for the Class B Loans, or 75% for the Class C Loans. To the extent these LTV triggers are breached, there can be no leakage of distributions to the Subordinated Lenders and all distributions are used to cure the LTV breach by repaying the Rated Debt in sequential order of seniority. At issuance, KBRA noted that given the lower initial LTV (due to the discount on the Portfolio Assets) there is a greater probability of distributions to Subordinated Lenders as there was a cushion between the initial LTV and the LTV thresholds. Additionally, the structure includes a Minimum NAV Test which is considered satisfied if the Adjusted NAV is greater than 20% of the aggregate initial commitments of all the Rated Debt and the Subordinated Loans. If the Minimum NAV Test is breached, all distributions are used to repay the Rated Debt in sequential order of priority until either the test is cured or all Rated Debt has been repaid in full. As of March 31, 2026, both the LTV Test and the Minimum NAV Test were satisfied. The applicable NAV was $95.1 million, above the Minimum NAV Test threshold of $23.2 million.
    • Amortization Profile: From January 2025 to July 2028 or if the LTV exceeds 87.5%, 60% of the available cash flows are applied to repay the Rated Debt in sequential order. The remaining 40% of cash flows (subject to compliance with the triggers as described above), can be distributed to the Subordinated Lenders. Post the Clean-Up Amortization Date (July 2028), 100% of the available cash flows are applied to the Rated Debt in sequential order of priority. This amortization profile prioritizes repayment of the senior most class of Rated Debt but also for meaningful distributions to the Subordinated Lenders when compared to a pro-rata amortization profile, in which only 25% of cash flows would theoretically be distributed to the Subordinated Lenders. KBRA’s cash flow analysis considers the implications of this repayment profile.
  • Pricing Tied to the Credit Performance: The transaction credit agreement considers a step-up price for the Rated Debt if the rating on either Class A, Class B or Class C Loans declines. If the Class A Loans, Class B Loans, or Class C Loans’ rating were to be downgraded by between one and three rating subcategories, the interest on any future interest accruals would increase by 50 bps until the rating has either been upgraded back to the initial rating or the Rated Debt has been repaid in full. This step-up increases by an additional 50 bps if the outstanding rating on the Class A Loans, Class B Loans, and Class C Loans were to be further downgraded beyond three rating subcategories from their initial rating. KBRA has considered the impact of this pricing increase in its cash flow analysis.
  • Uncertainty on Distribution Size & Timing: The collateral supporting repayment of the Rated Debt does not generate cash flow on a fixed schedule. Investors in secondaries, including CVC Secondary Partners (“CVC SP” or the “Firm”), are subject to the amounts and timing of distributions from the GPs managing the funds in which they invest. Unlike the cash flows from traditional fixed income securities, such distributions are not paid in fixed amounts nor on predetermined dates.
  • Quality of Underlying Assets: The Portfolio Assets consist of equity interests in portfolios of private equity funds. These investments carry equity-like credit risk given the potential for volatility and uncertainty of performance.
  • Manager Review and Track Record: CVC Secondary Partners, LLP is a global private equity firm focused on secondary investments, with approximately $22 billion of assets under management (AUM). The Firm was established in 2017 as Glendower Capital following the spin-out of the secondary business founded by its senior team at Deutsche Asset Management in 2005. CVC Capital Partners acquired the business in 2022 and completed the acquisition of the remaining ownership stake in 2024, after which the platform was rebranded as CVC Secondary Partners. CVC SP is headquartered in London with a U.S. advisory presence in New York and is supported by a global investment platform.

Rating Sensitivities

  • Underperformance of Fund Collateral: Deterioration in portfolio valuation or a trend of collateral cash flows that are notably lower than current forecasted performance.
  • Asset Coverage: De-leveraging of the Rated Debt that decreases LTV coupled with stable or better than expected Fund performance.

To access ratings and relevant documents, click here.

Click here to view the report.

Related Publication

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.

The rated entity is, or has a relationship with, one or more of KBRA Europe/KBRA UK shareholders that is required to be disclosed under applicable credit rating agency regulation in the EU and/or the UK. Please review KBRA's shareholder disclosures, which are updated periodically.

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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