NEW YORK–(COMMERCIAL THREAD) – Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three categories of notes issued by VCP RRL ABS I, Ltd. (“VCP RRL I”), a securitization backed by a portfolio of recurring income and loans to mid-market companies.
VCP RRL I is a $ 439.7 million securitization managed by Vista Credit Partners, LP (“VCP” or the “Collateral Manager”), an investment advisor and subsidiary of Vista Equity Partners (collectively, these subsidiaries and ‘other funds managed by them and their “Vista” affiliates). The securitization consists of $ 285.8 million Class A Fixed Rate Notes, $ 39.5 million Class B Fixed Rate Notes, $ 35.2 million Class Fixed Rate Notes C and $ 79.2 million in subordinated notes, which are expected to receive payments from a static portfolio of recurring income loans. (“RRL”) and Middle Market Loans (“MML”). The maximum advance rate is 65.0% for Class A Notes, 74.0% for Class B Notes and 82.0% for Class C Notes. credit, excess spreads and structural features.
Vista’s recurring income lending strategy focuses on senior secured loans to enterprise software companies with a minimum level of recurring income and low loan-to-value ratios. Despite the low level of earnings, portfolio debtors generally have strong liquidity profiles and credit covenants. The overall K-WARF of the portfolio is 3566, which represents a weighted average valuation of the portfolio between B- and CCC +. The portfolio presented to KBRA contains exposures to 43 debtors with 65.3% of the nominal exposure to RRLs. There may be pressures on the credit quality of the portfolio due to macroeconomic conditions. As such, the K-WARF of the portfolio may increase in the short term, which KBRA took into account in its analysis.
Vista Credit Partners is an investment advisor established in 2013 as a funding partner for enterprise software companies. As a subsidiary of Vista Equity Partners (“VEP”), VEP provides accounting, operational and administrative services to VCP. The collateral manager will also leverage the VEP platform, including its investment professionals and other resources. Founded in 2000, VEP has capital under management of $ 77 billion as of January 1, 2021, including $ 4.5 billion in credit.
KBRA’s preliminary ratings on the Class A and B Notes take into account the on-time payment of interest and final payment of principal on the applicable stated maturity date, while KBRA’s rating on the Class C notes takes account for the final payment of interest and principal on the applicable indicated due date.
Further information on key credit considerations, sensitivity analyzes that examine the factors that may affect these credit ratings and how they might lead to an upgrade or downgrade, and ESG factors (when they are a key factor in changing the credit rating or rating outlook) can be viewed in the full rating report mentioned above.
A description of all substantially significant sources that were used to prepare the credit rating and information about the method (s) (including significant models and sensitivity analyzes of the relevant key rating assumptions, if any) used to determine 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 information relating to this rating measure is available in the information disclosure form (s) mentioned above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures can be found at www.kbra.com.
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the United States Securities and Exchange Commission as NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a credit rating agency with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a credit rating agency with the UK Financial Conduct Authority under the temporary registration regime. In addition, KBRA is appointed as the designated rating agency by the Ontario Securities Commission for issuers of asset-backed securities to file a simplified prospectus or a shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a credit rating provider.