Six Preliminary Ratings Assigned to Madison Park Funding XX Ltd. In Connection With Proposed Refinancing

Stocks and Financial Services Press Releases Tuesday June 12, 2018 10:09
NEW YORK--12 Jun--S&P Global Ratings

NEW YORK (S&P Global Ratings) June 11, 2018--S&P Global Ratings today assigned its preliminary ratings to the class A-1R, B-R, C-R, D-R, E-R, and F-R replacement notes from Madison Park Funding XX Ltd., a collateralized loan obligation (CLO) originally issued in April 2016 (see list). The transaction is managed by Credit Suisse Asset Management LLC. 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 replacement classes are expected to be issued at a lower weighted average cost of debt than the current notes. Furthermore, all replacement classes are expected to be issued at floating spreads, replacing the current fixed and floating rates.

The preliminary ratings are based on information as of June 11, 2018. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings.

On the June 29, 2018, refinancing date, the proceeds from the issuance of the replacement notes are expected to redeem the original notes. At that time, we anticipate withdrawing the ratings on the original Class A notes and assigning ratings to the replacement A-1R, B-R, C-R, D-R, E-R, and F-R notes. However, if the refinancing doesn't occur, we may affirm the ratings on the original class A notes and withdraw our preliminary ratings on the replacement A-1R, B-R, C-R, D-R, E-R, and F-R notes.

The replacement notes are being issued via a proposed supplemental indenture, which, in addition to outlining the terms of the replacement notes, is expected to:
  • Issue the replacement classes at a lower weighted average cost of debt than the current notes.
  • Issue the all replacement classes at floating spreads, replacing the current fixed and floating rates.
  • The stated maturity, reinvestment period, and non-call period will be extended by 3.25, 2.5, and 2.2 years, respectively.

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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