KBRA Assigns Preliminary Ratings to Monroe Capital ABS Funding III, LP

NEW YORK--(BUSINESS WIRE)--KBRA assigns preliminary ratings to three classes of notes issued by Monroe Capital ABS Funding III, LP (“MCAF III”), a securitization backed by a portfolio of recurring revenue and middle market corporate loans.

MCAF III is a $485.0 million securitization managed by Monroe BDC Advisors, LLC (“Monroe” or the “Collateral Manager”), an affiliate of Monroe Capital LLC. The securitization consists of $310.4 million of Class A notes, $53.35 million of Class B notes, $24.25 million of Class C notes (collectively, the “Rated Notes”) and $97.0 million of subordinated notes, which expect to receive payments from a portfolio of recurring revenue loans (“RRLs”) and middle market loans (“MMLs”). The ratings reflect initial credit enhancement levels, excess spread, and structural features.

The Rated Notes benefit from internal credit enhancement through subordination, borrowing base, and excess spread. The collateral portfolio is comprised of 49 obligors, representing a combination of first-lien senior secured RRLs and traditional MMLs. The portfolio includes a minimum 40% Specified Recurring Revenue Loans (“SRRL”), a subset of the broader pool of RRLs with specific characteristics that could enhance the recovery prospects of such loans. The portfolio is concentrated to obligors in the software and technology industry who serve a diverse base of end users. The transaction has a two-year reinvestment period during which the initial portfolio may experience turnover through trading and substitution. The Class A, B and C Notes have advance rates of 64.0%, 75.0% and 80.0%, respectively. The overall K-WARF of the portfolio is 3623, which represents a weighted average portfolio assessment between B- and CCC+.

KBRA’s preliminary ratings on the Class A and B Notes considers timely payment of interest and ultimate payment of principal by the applicable stated maturity date. KBRA’s preliminary ratings on the Class C Notes considers ultimate payment of interest and ultimate payment of principal by the applicable stated maturity date.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodologies

• Structured Credit: Structured Credit Global Rating Methodology
• Structured Finance: Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

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.

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.

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.

Doc ID: 1012544