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KBRA Assigns Ratings to the Senior Loans, Mezzanine Loans, and Junior Loans Issued by Keys Investor III, LLC

30 Sep 2025   |   New York

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KBRA assigns an 'A-' rating to the Senior Loans, 'BBB-' rating to the Mezzanine Loans and 'B-' rating to the Junior Loans (together, the "Rated Loans") issued by Keys Investor III, LLC (the "Issuer" or "SPV") legally owned and controlled by Oceanview US Holdings ("OVUSH"). The outlook on each class of Rated Loans is 'Stable'. The total committed amount, inclusive of the Subordinated Notes, is $488.8 million, with initial advance rates of 55.5%, 71.7% and 87.0% for the Senior Loans, Mezzanine Loans, and Junior Loans, respectively.

The net proceeds of the transaction will be initially invested in an asset portfolio consisting of limited partnership interests ("LP Interests") in ICG Core Private Equity Fund LP ("ICG CPE") and Coller Private Credit Secondaries (the "Coller Fund"). Distributions from the LP Interests are intended to fund capital calls and other fund obligations, expenses and interest on and repayment of the Rated Loans.

Key Credit Considerations

  • Asset Coverage: Giving credit to the credit enhancement provided by the uncalled Subordinated Loans, the Senior Loans have an initial LTV ratio of 55.5%, equivalent to 180.2% asset coverage. The Mezzanine Loans have an initial LTV of 71.7%, corresponding to 139.5% asset coverage, while the Junior Loans have an initial LTV of 87.0%, equating to 114.9% asset coverage.
  • Transaction Structure:The transaction includes multiple tests and structural features which are listed below.
    • LTV Trigger: The Rated Loans lenders benefit from a blended LTV test, which accelerates cash sweeps to the Rated Loans when the LTV on the Rated Loans exceeds the target LTV for each class of Rated Loans. The blended target LTV is calculated as a weighted average LTV (based on funded amounts), reflecting the value and concentration attributable to the Coller and ICG components. The applicable Targeted LTV on each Payment Date is equal to (i) the product of (x) the ICG Fund Component and (y) the ICG Fund Percentage plus (ii) the product of (x) the Coller Fund Component and (y) the Coller Fund Percentage. The target LTVs for both components decline as the portfolio becomes more concentrated. If these tests are breached, no distributions may be made to the Subordinated Loans, and all excess cash must be used to repay the Rated Loans in sequential order of priority until the LTV tests have been cured, in accordance with the respective steps of the Priority of Payments. The target LTV is calculated on a pro forma basis to reflect point-in-time distributions and the remaining portfolio value after the current payment period. While considered a credit-positive, this test is highly sensitive to the accuracy of the portfolio valuation and could potentially allow for greater distributions to the Subordinated Loans if valuations are overstated relative to the ultimate realizable values.
    • Amortization Profile: During the first stage of the transaction, repayment of the Rated Loans is determined based on the aforementioned targeted LTVs. Beginning in the second stage, the Priority of Payments changes to repay the Rated Loans in full ahead of any distributions to the Subordinated Loans.
    • Cash Sweep Mechanics: Provisions require excess cash to be applied to cure LTV breaches, to redeem fund interests if leverage exceeds 95% during the first stage of the transaction, and, thereafter, to submit full redemption requests (subject to NAV conditions). These mechanics operate as cash sweeps rather than hard prepayment obligations, mitigating refinancing and tail-end risk by enforcing deleveraging when leverage metrics deteriorate.
    • Draw Mechanics: If the Rated Loans are not paid in full at maturity, one year prior, or the NAV of the Issuer is less than or equal to zero, the Issuer will draw on the Subordinated Loans, subject to remaining availability, to cover the shortfall. Since the Subordinated Loans provide first loss protection, the credit quality of the sole equity holder, OVLAC, is a material consideration to the rating assigned to the Rated Loans. KBRA have determined the credit quality of OVLAC is currently sufficient to support the ratings on the Rated Loans, however a deterioration in the credit quality may impact the assigned ratings.
    • Exposure to Interest Rate Risk: The Rated Loans will carry floating rate coupons. In the event of continued rising rates, the Issuer's borrowing cost will increase, further stressing its ability to fulfill interest and principal obligations on the Rated Loans. KBRA's cash flow analysis and the assigned ratings consider this risk. However, the private credit component is predominantly composed of floating loans, which provides a partial offset.
  • Evolving Portfolio of Private Asset Collateral: Since the Issuer’s asset commitments will ramp up over time, the ultimate composition of the collateral supporting the repayment of the Rated Loans could vary due to performance or the timing and amount of actual capital called. KBRA evaluated a range of cash flow scenarios, which incorporate potential variability in performance outcomes.
  • Interest Deferral & Headroom: Subject to pro forma compliance with the LTV test, additional commitments under the Senior or Mezzanine Loans, beyond those called at closing, may be drawn to cover interest payments on the Senior and Mezzanine Loans. This mechanism requires NAV appreciation such that there is de-leveraging of the Rated Loans to draw back to the initial advance rates. Once this headroom is exhausted, interest on the Rated Loans will be deferred if timely payment is not possible. The Senior Loans are also subject to a limit on the number of Deferred Interest periods permitted. Any deferral beyond eight consecutive payment dates or more than 16 payment dates in total over the life of the transaction, constitutes an Event of Default (EoD). In scenarios where NAV does not appreciate, liquidity pressures may arise, resulting in interest shortfalls. Mitigating factors include income generated by the Coller Fund and the Manager’s ability to submit redemption requests for the LP interest during the first stage of the transaction.
  • Manager Review and Track Record: Coller Capital’s secondaries strategy builds on the experience and institutional capabilities created by the firm over more than 30 years. Coller Capital (the “Firm”), through its flagship Funds, has been investing in secondary opportunities for over 30 years, with $45 billion of assets under management (AUM) and a team of 309 professionals across 10 global offices, as of March 2025. Intermediate Capital Group (“ICG”) is a global alternative asset manager with over 35 years of experience across private equity and credit markets. As of March 2025, ICG manages approximately $98 billion in assets and employs 637 professionals across 19 global offices. ICG’s secondaries investment capabilities are led by the Private Equity Fund Investment (“PEFI”) team, which manages over $1.6 billion across LP secondary transactions, co-investment vehicles, and separately managed accounts. The team has a track record of executing secondary and co-investment transactions through multiple economic cycles. In addition, ICG’s platform includes dedicated investment strategies across structured and private equity, private debt, real assets, and credit. ICG has been listed on the London Stock Exchange since 1994.

Rating Sensitivities

  • Significant Underperformance of Fund Assets or Reductions of Forecasted Distributions: Significant or sustained deterioration in portfolio valuation or trend of collateral cash flows that are notably lower than current forecasted performance may result in a negative rating change.
  • Credit Profile of the Rated Loanholders & Subordinated Loanholder: Given the transaction’s reliance on the structure to continue to fund through the transaction life, KBRA may consider a downward ratings revision if the credit quality of the Subordinated Loan lender were to decline relative to the current rating of Oceanview Life and Annuity Company.
  • Significant De-Leveraging: A positive rating action may occur if there is significant de-leveraging of the Rated Loans, resulting in a reduction in LTV that exceeds forecasted or targeted levels.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodologies

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.

There are certain issuers, entities or transactions rated by KBRA Europe or KBRA UK that may be or have relationships with Shareholders and/or Shareholder-Related Companies, as that term is defined in KBRA’s Shareholder and Shareholder Related Companies for KBRA Europe and KBRA UK Policy and Procedure. Relevant disclosure information may be found here.

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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