S&P: Preliminary Ratings Assigned To Four Classes From Finn Square CLO Ltd. In Connection With Refinancing
The replacement notes will be issued via a proposed supplemental indenture. The replacement notes are expected to be issued at a lower spread over LIBOR than the original notes they replace. The cash flow analysis demonstrates, in our view, that the replacement notes have adequate credit enhancement available at the current rating levels.
Although the cash flow results indicate a lower rating for the existing class D notes, the transaction has experienced overall stable performance since our previous rating affirmations in May 2016. All coverage ratios are well above the minimum triggers, and the post-refinance structure improves the cash flow results significantly.
On the Sept. 26, 2016, refinancing date, the proceeds from the issuance of the replacement notes are expected to redeem the original notes, upon which 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.
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 Nationally Recognized Statistical Rating Organization (NRSROs) to assess the credit quality of assets not rated by S&P Global Ratings. The criteria provide specific guidance for the treatment of corporate assets not rated by S&P Global Ratings, and the interpretation outlines the treatment of securitized assets.