OREANDA-NEWS. S&P Global Ratings today assigned its preliminary ratings to the class A-R, B-R, C-R, and D-R floating-rate replacement notes from Venture X CLO Ltd., a collateralized loan obligation (CLO) originally issued in 2012 that is managed by MJX Asset Management LLC. On the refinancing date, we expect to raise our rating on the class E notes and affirm the rating on the class F notes from the same transaction.

The replacement notes are being issued via a proposed supplemental indenture, which outlines the terms of the replacement notes. Apart from the changes to the spreads on the replacement notes, there are no other changes to the original deal terms.

Today's rating actions follow our review of the transaction's performance using data from the Sept. 8, 2016, trustee report.

The preliminary ratings reflect our opinion that the credit support available is commensurate with the associated rating levels. The preliminary ratings on the replacement class B-R, C-R, and D-R notes are higher than the rating on the original B, C and D notes. The higher ratings on the replacement classes reflect our view of the stable collateral performance, the portfolio's reduced weighted average life, and that the deal will start amortizing the senior notes on its next payment date in October 2016.

The floating-rate replacement notes are expected to be issued at a lower spread over LIBOR than the original notes (see table). On the Oct. 20, 2016, refinancing date, the proceeds from the issuance of the replacement notes are expected to redeem the original class A, B, C, and D notes. At that time, we anticipate withdrawing the ratings on the original notes and assigning final 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. On the refinancing date, the balance of the class A-R note will be reduced to $243.142 million from its original balance of $263.50 million, taking into account the paydowns on the October 2016 payment date.

Our review of the transaction also relied in part upon a criteria interpretation with respect to "CDOs: Mapping A Third Party's Internal Credit Scoring System To Standard & Poor's Global Rating Scale," published May 8, 2014, which allows us to use a limited number of public ratings from other NRSROs for the purposes of assessing the credit quality of assets not rated by S&P Global Ratings. The criteria provide specific guidance for treatment of corporate assets not rated by S&P Global Ratings, and the interpretation outlines treatment of securitized assets.

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 (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.