KBRA Assigns Preliminary Ratings to Avoca CLO XVII Designated Activity Company

DUBLIN--()--Kroll Bond Rating Agency Europe Limited (KBRA) assigns preliminary ratings to six classes of notes issued by Avoca CLO XVII Designated Activity Company.

Avoca CLO XVII Designated Activity Company is a cash flow collateralised loan obligation (CLO) managed by KKR Credit Advisors (Ireland) Unlimited Company (the collateral manager). The CLO will have a 4.5-year reinvestment period and the legal final maturity is 15 October 2032. The ratings reflect initial credit enhancement levels, five levels of coverage tests including par value and interest coverage tests, excess spread, and a reinvestment overcollateralisation test.

The collateral in Avoca CLO XVII Designated Activity Company will mainly consist of European leveraged loans and bonds issued by corporate obligors diversified across sectors. The obligors in the portfolio have a K-WARF of 2525, which represents a weighted average portfolio assessment of approximately B. The total portfolio par amount is €550 million with exposures to over 175 obligors. This is a reset transaction with a €100 million upsize and the portfolio is expected to be over 95% ramped at closing, with the remainder acquired before the transaction’s effective date.

KKR Credit Advisors (Ireland) Unlimited Company (KKR Credit Advisors or the collateral manager), is an Irish resident company formed in 2002 (fka Avoca Capital) to manage European debt. KKR Credit Ireland, formerly Avoca Capital, was acquired by KKR & Co. L.P. in 2014 and is a relying adviser of KKR Credit US (KKR), a global asset manager founded in 1976. KKR is a global asset management platform with approximately $206 billion in assets under management (AUM) as of August 2019, including approximately $70 billion across leveraged credit, private credit, and special situations. Headquartered in New York, New York, KKR employs over 430 investment professionals across 9 cities in 8 countries. The European leveraged credit leadership team has over 20 years of industry experience. Dedicated leveraged credit sector analysts and traders with various levels of experience are based in Dublin and London and are supported by risk, compliance, and credit strategies functions.

The Class B-1R and B-2R Notes each have par subordination of 27.5% and 10% cushion on the Class A/B Par Value Test. The preliminary ratings on both Class B-1R and B-2R Notes represent timely interest and ultimate principal, and the preliminary ratings on C-R, D-R, E-R, and F-R Notes represent ultimate payment of interest and principal by the stated maturity date.

KBRA analysed the transaction using Global Structured Credit Rating Methodology published on August 7, 2018 and the and the Global Structured Finance Counterparty Methodology published on August 8, 2018.

Class

Preliminary Rating

Initial Principal Amount

Interest Rate

Class B-1R

AA (sf)

€37,750,000

3mE + 1.70%

Class B-2R

AA (sf)

€20,000,000

2.20%

Class C-R

A (sf)

€38,500,000

3mE + 2.50%

Class D-R

BBB (sf)

€35,530,000

3mE + 3.85%

Class E-R

BB- (sf)

€27,500,000

3mE + 6.38%

Class F-R

B- (sf)

€13,750,000

3mE + 8.84%

To access the full report, click here.

Disclosures

Further disclosures relating to this rating action are available in the EU Information Disclosure Form. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

To access ratings, reports and disclosures, click here.

Related Publications: (available at www.kbra.com)

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical Contacts:
Adam DeJong, Associate (Lead Analyst)
+353 (1) 588 1270
adejong@kbra.com

Sean Malone, CFA, Director
+1 (646) 731-2436
smalone@kbra.com

Kathy Song, CFA, Associate Director
+1 (646) 731-1209
ksong@kbra.com

Eric Hudson, Managing Director (Rating Committee Chair)
+1 (646) 731-3320
ehudson@kbra.com

Contacts

Analytical Contacts:
Adam DeJong, Associate (Lead Analyst)
+353 (1) 588 1270
adejong@kbra.com

Sean Malone, CFA, Director
+1 (646) 731-2436
smalone@kbra.com

Kathy Song, CFA, Associate Director
+1 (646) 731-1209
ksong@kbra.com

Eric Hudson, Managing Director (Rating Committee Chair)
+1 (646) 731-3320
ehudson@kbra.com