Six Preliminary Ratings Assigned To Octagon Investment Partners 18-R Ltd. In Connection With Proposed Refinancing

Stocks and Financial Services Press Releases Tuesday March 20, 2018 09:42
NEW YORK--20 Mar--S&P Global Ratings

NEW YORK (S&P Global Ratings) March 19, 2018--S&P Global Ratings today assigned its preliminary ratings to the class A-1a, A-2, B, C, D, and E notes, from Octagon Investment Partners 18-R Ltd. Proceeds from this issuance will be used to redeem the rated notes from Octagon Investment Partners XVIII Ltd., a collateralized loan obligation originally issued in August 2013 (and subsequently reset in March 2017), that is managed by Octagon Credit Investors LLC.

The preliminary ratings reflect our opinion that the credit support available is commensurate with the associated rating levels.
The preliminary ratings are based on information as of March 19, 2018. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings.

On the April 19, 2018, refinancing date, the proceeds from the issuance of the replacement notes issued by Octagon Investment Partners 18-R Ltd., combined with the proceeds of the issuance of additional subordinated notes, are expected to redeem the currently outstanding notes from Octagon Investment Partners XVIII Ltd. At that time, we anticipate withdrawing the ratings on the original notes and assigning ratings to the replacement notes. However, if the refinancing doesn't occur, we may affirm the ratings on the original notes and withdraw our preliminary ratings on the replacement notes. Based on provisions in the indenture:

  • The new notes are expected to be issued at a lower spread than the original transaction's notes.
  • The replacement class notes are expected to be issued at a floating spread, replacing the current floating spread.
  • The stated maturity will be April 16, 2031.
  • The reinvestment period ends in April 2023.

Our review of this transaction included a cash flow analysis, based on the portfolio and transaction as reflected in the trustee report, to estimate future performance. In line with our criteria, our cash flow scenarios applied forward-looking assumptions on the expected timing and pattern of defaults, and recoveries upon default, under various interest rate and macroeconomic scenarios. In addition, our analysis considered the transaction's ability to pay timely interest or ultimate principal, or both, to each of the rated tranches.

We will continue to review whether, in our view, the ratings assigned to the notes remain consistent with the credit enhancement available to support them, and we will take further rating actions as we deem necessary.


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