Fitch Downgrades One Class of Kodiak CDO I, Ltd.
CHICAGO--(BUSINESS WIRE)--Fitch Ratings has downgraded one class of notes issued by Kodiak CDO I, Ltd. (Kodiak I), as follows:
--$83,088,404 class B notes to 'Dsf' from 'CCsf'
KEY RATING DRIVERS
The rating downgrade reflects the partial default in payment of interest to the class B notes.
Kodiak I entered an Event of Default on Feb. 7, 2014 due to a partial default in the payment of interest on the non-deferrable class B notes. The interest shortfall was primarily caused by the redemption of one performing issuer, which resulted in a significant reduction in the quarterly interest collection amount available for distribution to noteholders.
There are multiple outstanding Hedge Agreements in Kodiak I that are out of the money and require a significant payment by the CDO to the Swap Counterparty each quarter.
In the event that currently distressed securities resume payment of interest in an amount sufficient to cure the class B notes' interest shortfall and assure sufficient level of interest coverage going forward, and as the Hedge Agreements reach maturity, Fitch is likely to upgrade these notes to the appropriate level at that time.
Kodiak I is a trust preferred collateralized debt obligation (TruPS CDO), which closed on Sept. 19, 2006. The portfolio is composed primarily of trust preferred securities issued by REITs and is managed by EJF Capital, LLC.
Additional information is available at www.fitchratings.com.
The information used to assess these ratings was sourced from trustee reports, collateral manager reporting Web sites and the public domain.
Applicable Criteria and Related Criteria:
--'Global Rating Criteria for Structured Finance CDOs' (Sept. 12, 2013).
Applicable Criteria and Related Research:
Global Rating Criteria for Structured Finance CDOs