KBRA Assigns Preliminary Ratings to Monroe Capital ABS Funding II, LP
June 25 2024 - 12:03PM
Business Wire
KBRA assigns preliminary ratings to four classes of debt issued
by Monroe Capital ABS Funding II, LP ("MCAF 2024-1"), a
securitization backed by a portfolio of recurring revenue and
middle market corporate loans. This transaction is a reset of the
Monroe Capital ABS Funding II, LP, which originally closed in
February 2023.
MCAF 2024-1 is a $528.4 million securitization managed by Monroe
Capital Management Advisors, LLC (“Monroe” or the “Collateral
Manager”), an affiliate of Monroe Capital LLC. The securitization
consists of $125.0 million of Class A-L-R floating-rate debt,
$178.8 million of Class A-1-R fixed-rate debt, $44.9 million of
Class B-R fixed-rate notes, $43.6 million of Class C-R fixed-rate
notes (collectively the “rated Notes”), and $136.1 million of
subordinated notes, which expect to receive payments from a
portfolio of recurring revenue loans (“RRLs”) and middle market
loans (“MMLs”). This transaction will reset the terms of the
original transaction, including the stated maturity, non-call
period, reinvestment period, note interest rates and notional
balances. Proceeds from the issuance of the new notes will be used
to redeem the outstanding notes in full and to purchase new assets
($150 million upsize).
The collateral in MCAF 2024-1 may contain up to 75% RRLs.
Monroe’s recurring revenue lending strategy focuses on first-lien
senior secured loans to business-to-business software and
technology companies with a minimum level of recurring revenue and
low loan-to-value ratios. Despite the low level of earnings, the
obligors in the portfolio usually have strong liquidity profiles
and loan covenants. The portfolio presented to KBRA contains
exposures to 72 obligors and has an overall K-WARF of 3303, which
equates to a weighted average portfolio assessment around B-.
Monroe is an affiliate of Monroe Capital LLC established in
2004, with $15.9 billion of committed and managed capital under
management as of June 2023. Monroe currently manages $9.7 billion
in middle market CLOs across approximately 13 outstanding
transactions. Since its founding, Monroe has invested $8.6 billion
within its Software, Technology, & Recurring Revenue
(“S.T.A.R.R.”) strategy. The senior management team averages over
24 years of collective industry experience.
Kroll Bond Rating Agency’s (KBRA) ratings on the Class A-L-R,
A-1-R (together the “Class A-R Debt"), and Class B-R Note considers
timely payment of interest and ultimate payment of principal by the
applicable stated maturity date. Kroll Bond Rating Agency’s (KBRA)
ratings on the Class C-R Note considers ultimate payment of
interest and principal by the applicable stated maturity date.
To access rating and relevant documents, click here.
Click here to view the report.
Methodologies
- Structured Finance: Global Structured Finance Counterparty
Methodology
- Structured Credit: Structured Credit Global Rating
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) is a full-service credit
rating agency 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 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.
Doc ID: 1004868
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Analytical Contacts
Peter Connolly, Senior Director (Lead Analyst) +1 646-731-1283
peter.connolly@kbra.com
Jorge Jimenez-Alvarez, Associate +1 646-731-2373
jorge.jimenezalvarez@kbra.com
Chloe Wang, Analyst +1 646-731-1219 chloe.wang@kbra.com
Eric Hudson, Senior Managing Director (Rating Committee Chair)
+1 646-731-3320 eric.hudson@kbra.com
Business Development Contact
Jason Lilien, Senior Managing Director +1 646-731-2442
jason.lilien@kbra.com