NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns final ratings to five classes of notes issued by Hobson Capital, LLC (Hobson Capital).
Hobson Capital is a $300.00 million middle market loan warehouse managed by Guggenheim Partners Investment Management, LLC (Guggenheim or the collateral manager), which will be used to ramp assets for a future collateralized loan obligation (CLO). The maximum commitments will be $300.0 million (“warehouse debt”) of which $190.0 million will be funded at closing. Proceeds from the issuance of the notes will be used to originate and purchase a portfolio of primarily middle market senior secured term loans to corporate borrowers.
Hobson Capital will have an 18-month reinvestment period and the legal final maturity is December 2027. The ratings reflect initial credit enhancement levels, excess spread, three levels of coverage tests including overcollateralization ratio and interest coverage tests. The warehouse debt is expected to be fully repaid in connection with the issuance of the Take-Out CLO securities.
Guggenheim’s direct lending platform has originated approximately $12.5 billion in middle market loans since 2002 and has current assets under management (AUM) of approximately $5.5 billion as of November 2019. Of this, approximately $1.0 billion is being managed through middle market CLOs and warehouses. Guggenheim’s direct lending senior management team has over 17 years’ experience managing middle market credit, and the core team members remains largely intact over that time period.
Kroll Bond Rating Agency’s (KBRA) rating on the Class A Notes represents timely payment of interest and ultimate payment of principal by the applicable stated maturity date. KBRA’s rating on the Class B and C Notes represent ultimate payment of interest and principal by the applicable stated maturity date.
KBRA’s principal only rating on the Structured A Notes and Structured B Notes represents ultimate payment of the initial principal amount by the legal final maturity.
KBRA analyzed the transaction using Global Structured Credit Rating Methodology published on August 7, 2018 and the Global Structured Finance Counterparty Methodology published on August 8, 2018.
The ratings are based on information known to KBRA at the time of this publication.
Class |
Amount* |
KBRA Rating |
Certificate Type |
Class A |
$212,000,000 |
AA (sf) |
Principal and Interest |
Class B |
$24,700,000 |
A- (sf) |
Principal and Interest |
Class C |
$15,700,000 |
BBB- (sf) |
Principal and Interest |
Structured A |
$21,136,000 |
A- (sf) |
Principal-only |
Structured B |
$168,864,000 |
BBB- (sf) |
Principal-only |
*Represents full commitment amount for Class A, B, and C Notes. Represents funded initial principal amount for Structured A and Structured B Notes.
The Structured Notes are formed by combining several debt tranches with the equity tranche and carry a principal only rating. The Structured A Notes hold $15.7 million of the Class B Notes and $5.436 million of the subordinated notes. The Structured B Notes hold $134.10 million of the Class A Notes, $10.0 million of the Class C Notes, and $24.764 million of the subordinated notes. Both Structured Notes will be fully funded at close.
To access ratings, reports and disclosures, click here.
Related Publications: (available at www.kbra.com)
- Hobson Capital, LLC New Issue Report
- Falcon 2019-1 New Issue Report
- Structured Things: The Upside-Down Yield Curves
- KBRA’s Structured Credit 101: Collateralized Loan Obligations
- KBRA’s Structured Credit 401: Primer on Combination Notes
- Global Structured Credit Rating Methodology
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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.
