OREANDA-NEWS. S&P Global Ratings today raised its ratings on the class B, C, and D notes from Goldentree Loan Opportunities IV Ltd. and removed them from CreditWatch, where they were placed with positive implications on July, 14, 2016. At the same time, we affirmed our 'AAA (sf)' ratings on the class A-1a, A-1b, A-1cS, A-1cJ, and A-2 notes from the same transaction (see list).

Today's rating actions follow our review of the transaction's performance using data from the August 2016 trustee report.

The upgrades reflect the transaction's $322.16 in collective paydowns to the class A-1a, A-1b, and A-1cS notes since our Feb. 2, 2015, rating actions. These paydowns resulted in improved reported overcollateralization (O/C) ratios since the December 2014 trustee report, which we used for our February 2015 rating actions:The class A O/C ratio improved to 196.41% from 137.14%.The class B O/C ratio improved to 159.18% from 126.30%.The class C O/C ratio improved to 131.70% from 116.19%.The class D O/C ratio improved to 120.69% from 111.47%.The collateral portfolio's credit quality has slightly deteriorated since our last rating actions. Collateral obligations with ratings in the 'CCC' category have increased, with $23.71 million reported as of the August 2016 trustee report, compared with $12.14 million reported as of the December 2014 trustee report. Over the same period, the par amount of defaulted collateral has increased to $16.62 million from $10.38 million. However, despite the slightly larger concentrations in the 'CCC' category and defaulted collateral, the transaction has benefited from a drop in the weighted average life due to underlying collateral's seasoning, with 2.24 years reported as of the August 2016 trustee report, compared with 3.69 years reported at the time of our February 2015 rating actions.

The upgrades reflect the improved credit support at the prior rating levels; the affirmations reflect our view that the credit support available is commensurate with the current rating levels.

Our rating on the class D notes was driven by the application of the largest obligor default test from our corporate collateralized debt obligation criteria. The test is intended to address event and model risks that might be present in rated transactions. Despite cash flow runs that suggested a higher rating, the largest obligor default test constrained our rating on the class D notes at 'A+ (sf)'. The top five largest obligors in the transaction currently make up more than 19.49% of the portfolio's performing collateral balance.

Our review of this transaction included a cash flow analysis, based on the portfolio and transaction as reflected in the aforementioned 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 and/or ultimate principal to each of the rated tranches. The results of the cash flow analysis demonstrated, in our view, that all of the rated outstanding classes have adequate credit enhancement available at the rating levels associated with these rating actions.

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 will take rating actions as we deem necessary.