Sonic Capital LLC-Related Insured Custodial Receipts Rated #AA#

Stocks and Financial Services Press Releases Friday January 12, 2018 08:53
NEW YORK--12 Jan--S&P Global Ratings

NEW YORK (S&P Global Ratings) Jan. 11, 2018--S&P Global Ratings today assigned its 'AA' rating to the $12 million insured custodial receipts related to the class A-2 fixed-rate senior secured notes from Sonic Capital LLC's series 2016-1. The rating reflects our opinion of the likelihood that the custodian, The Bank of New York Mellon will have sufficient assets to pay timely interest and principal when due on the receipts. These assets include Sonic Capital LLC's series 2016-1 class A-2 notes, the underlying security ('BBB (sf)'), and an insurance policy provided by Assured Guaranty Corp. ('AA').

The rating is based on the higher of our rating on Assured Guaranty Corp., as the insurance provider, and the underlying security. Based on our analysis, we believe the assets support the full and timely payment of all obligations on the receipts, except in certain circumstances (see below).

On the closing date, the custodian acquired the underlying securities and issued custodial receipts maturing in 2046. The underlying security may be subject to redemption or other prepayment; however, the insurance policy will only cover payments when they would otherwise be due. The policy provides coverage in the event payments from the underlying security are recaptured due to the underlying issuer's bankruptcy.

If prepayments are recaptured, the policy will pay this preference coverage when regularly scheduled payments would have otherwise been due. In our view, the certificateholder could receive less than the par and accrued interest amounts due on the certificates if the insurer fails to pay on a claim from the custodian or becomes involved in insolvency proceedings itself. Therefore, in view of the custodial receipts' structure, changes to our rating on the certificates could result from, among other things, changes to our ratings on the insurer or the underlying security.

(For more information, see "Assured Guaranty Ltd. And Operating Companies," published July 24, 2017.) We have reviewed the relevant legal matters and opinions outlined in our criteria.

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