Preliminary Ratings Assigned To Four Classes From OHA Loan Funding 2013-2 Ltd. In Connection With Proposed Refinancing

Stocks and Financial Services Press Releases Wednesday May 16, 2018 10:27
CENTENNIAL--16 May--S&P Global Ratings

CENTENNIAL (S&P Global Ratings) May 15, 2018--S&P Global Ratings today assigned its preliminary ratings to the class A-R, B-R, and C-R replacement notes from OHA Loan Funding 2013-2 Ltd., a collateralized loan obligation (CLO) originally issued in 2013 that is managed by Oak Hill Advisors L.P. In addition, we assigned our preliminary ratings to the class X notes, which are also expected to be issued on the May 23, 2018, refinancing date. The replacement notes will be issued via a proposed supplemental indenture.

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 May 15, 2018. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings.

On the May 23, 2018, refinancing date, the proceeds from the issuance of the replacement notes, combined with the proceeds of the issuance of the class X notes and additional subordinated notes, are expected to redeem the original notes. 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.

The replacement notes are being issued via a proposed supplemental indenture, which, in addition to outlining the terms of the replacement notes, will also:
  • Issue additional class X senior floating-rate notes, which are expected to be paid down using proceeds in quarterly installments beginning Nov. 23, 2018
  • Issue the replacement class A-R, B-R, and C-R notes, and the new class X notes at a lower spread than the original notes.
  • Extend the stated maturity, reinvestment period, and non-call period date by 6.6, 5.6, and 4.6 years for the replacement class A-R, B-R, and C-R notes, respectively.
  • Give the manager an option to use the formula version of Standard & Poor's CDO Monitor tool.
  • Update the S&P Global Ratings' recoveries and industry classifications.
  • Provide that 91.47% of the underlying collateral obligations have credit ratings assigned by S&P Global Ratings.
  • Provide that 99.97% of the underlying collateral obligations have recovery ratings issued by S&P Global Ratings.

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 (see table). 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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