MidOcean Credit CLO III Assigned 12 Preliminary Ratings In Connection With Proposed Refinancing

Stocks and Financial Services Press Releases Friday June 15, 2018 09:15
NEW YORK--15 Jun--S&P Global Ratings

NEW YORK (S&P Global Ratings) June 14, 2018--S&P Global Ratings today assigned its preliminary ratings to the class A1-R, A2-R, A3A1, A3A2, A3B1, A3B2, B-R, C-R, D-R, E-R, and F-R replacement notes, as well as to the new class X notes, from MidOcean Credit CLO III, a collateralized loan obligation (CLO) originally issued in July 2014 that is managed by MidOcean Credit Fund Management L.P. 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 June 14, 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, combined with the proceeds of the issuance of the class X notes and additional income 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:
  • Increase the rated par amount to $477.20 million from $473.75 million. There will be no change to the target initial par amount of $500.00 million. The first payment date following the refinancing will be Oct. 21, 2018.
  • Extend the reinvestment period to April 21, 2023, from July 21, 2018.
  • Extend the non-call period to April 21, 2020, from July 21, 2016.
  • Extend the weighted average life test to April 21, 2027, from July 22, 2022.
  • Extend the legal final maturity date on the rated and income notes to April 21, 2031, from July 21, 2026.
  • Issue additional income notes, increasing the income note total balance to approximately $47.60 million from $44.25 million.
  • Issue additional class X floating-rate notes, which are expected to be paid using proceeds in quarterly installments beginning October, 2018.
  • Change the required minimum thresholds for the coverage tests.
  • Incorporate the recovery rate methodology and updated industry classifications outlined in our August 2016 CLO criteria update (see " Global Methodologies And Assumptions For Corporate Cash Flow And Synthetic CDOs," Aug. 8, 2016).

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