KBRA Assigns a Rating to Kobalt Music Assets LP, Series 2024-1
5 Mar 2024 | New York
KBRA assigns a rating to one class of notes issued by Kobalt Music Assets LP, Series 2024-1 (Kobalt 2024-1), a music royalty ABS transaction. Kobalt Music Assets LP (the Issuer) represents Kobalt Music Group’s first music royalty securitization. The transaction is collateralized by royalties from a music catalog (the Catalog) of content with over 5,000 works from top artists and songwriters, including AJR, YoungBoy Never Broke Again, Busta Rhymes, and Jessie J, which are among the largest in the Catalog by net publisher share. Royalty payments from the Catalog are all from musical compositions and musical publishing rights. An independent third-party valuation firm determined a valuation of $410.0 million as of September 30, 2023 for the Catalog using a discounted cash flow method.
Proceeds from the Series 2024-1 (the Notes) issuance are expected to be used to fund the reserve accounts, pay certain transaction expenses, repay existing indebtedness, and for other general corporate purposes. The Notes pay interest on a quarterly basis and are not scheduled to pay down principal prior to the April 2029 anticipated repayment date (ARD) for the Notes. Prior to the ARD, the only required principal payments are to maintain compliance with the borrowing base requirement which is a function of the note advance rate and the collateral value derived from the present value of the Valuation Agent’s annually updated valuation.
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