KBRA Assigns Ratings to Refinancing Notes of Barings Loan Partners CLO Ltd. 2
4 Feb 2025 | New York
KBRA assigns ratings to two classes of refinancing debt and concurrently affirms one rating and upgrades one rating from Barings Loan Partners CLO Ltd. 2 ("Barings CLO 2"), a cash flow collateralized loan obligation (CLO) backed primarily by a diversified portfolio of broadly syndicated senior secured term loans to corporate borrowers.
As a result of the partial refinancing, KBRA assigns ratings to Class A-R Notes and Class A-L Loans (the refinancing debt), which will have a combined notional balance equal to the redeemed Class A Notes. KBRA concurrently withdraws the ratings on the Class A Notes that are being refinanced. Additionally, KBRA upgrades ratings on the Class D Notes and affirms ratings on the Class E Notes, both of which are not being refinanced.
Barings CLO 2 is currently a $474.0 million cash flow CLO managed by Barings LLC (“Barings” or the “collateral manager”). The CLO originally closed on December 21, 2021. The notes were collateralized by a $500.00 million portfolio of broadly syndicated senior secured term loans to corporate borrowers at closing. The CLO exited its reinvestment period in January 2025, and will remain in the amortization period after the execution of the partial refinancing.
On the February 4, 2025 partial refinancing date, the Class A Notes have been fully redeemed using the proceeds from the issuance of the Class A-R Notes and Class A-L Loans.
The rated notes benefit from internal credit enhancement through subordination, overcollateralization, and excess spread. The priority of interest payments includes an excess cash sweep for the deferrable Class D and E Notes. To date, the Class D Notes have repaid $30.4 million, or 52.8% of the original principal balance, from excess interest proceeds. The collateral portfolio is comprised primarily of first-lien, senior secured broadly syndicated loans and has a K-WARF of 2243.
The ratings on the Class A-R Notes and Class A-L Loans consider the timely payment of interest and ultimate payment of principal by the applicable stated maturity date, while the ratings on the Class D and E Notes consider the ultimate payment of interest and principal by the applicable stated maturity date.
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