BAKU, Azerbaijan, October 13. Fitch
Ratings has assigned ratings and Rating Outlooks to Neuberger
Berman Loan Advisers CLO 65, Ltd., a $500 million collateralized
loan obligation to be managed by Neuberger Berman Loan Advisers IV
LLC.
According to the recent commentary by Fitch, the
transaction is an arbitrage cash flow CLO, with net proceeds from
the secured and subordinated notes financing a portfolio of
approximately $500 million of primarily first-lien senior secured
leveraged loans.
Fitch assigned the top rating of ‘AAAsf’ with a Stable
Outlook to the class A-2 notes. The class B notes were rated
‘AAsf’, class C-1 ‘A+sf’, class C-2 ‘Asf’, class D-1 ‘BBB+sf’,
class D-2 ‘BBB-sf’, and class E ‘BB-sf’ – all with Stable Outlooks.
The class A-1 and subordinated notes were not rated.
According to the report, the indicative portfolio
carries an average credit quality of ‘B’, with a weighted average
rating factor (WARF) of 23.83 and a weighted average recovery rate
(WARR) of 73.9%. First-lien senior secured loans make up 98.93% of
the portfolio, and the transaction has a five-year reinvestment
period.
Fitch noted that “the notes benefit from appropriate
credit enhancement and standard U.S. CLO structural features,”
despite the underlying loans’ highly speculative ‘B’ category
credit quality.
The largest three industries may account for up to
44.5% of the portfolio balance, while the top five obligors can
represent up to 12.5%, levels Fitch said are in line with other
recent CLOs.
