DBRS Morningstar Confirms Ratings on Notes Issued by TCP Rainier, LLC

DBRS, Inc. (DBRS Morningstar) confirmed the ratings of A (low) (sf) on the Class A Notes, BBB (sf) on the Class B Notes, and BB (sf) on the Class C Notes (collectively, the Notes) as well as the provisional rating of BBB (low) (sf) on the Combination Notes issued by TCP Rainier, LLC (TCP or the Issuer), pursuant to the Note Purchase and Security Agreement (NPSA) dated as of December 11, 2018 (and as further amended by the First Amendment dated as of July 2, 2019, and effective as of July 25, 2019, and by the Second Amendment dated as of February 28, 2020; together, the Amendments), among TCP as Issuer; U.S. Bank National Association (USB; rated AA (high) with a Stable trend by DBRS Morningstar) as Collateral Agent, Custodian, Document Custodian, Collateral Administrator, Information Agent, and Note Agent; and the Purchasers referred to therein.

The rating on the Class A Notes addresses the timely payment of interest (excluding the additional 1% of interest payable at the Post-Default Rate as defined in the NPSA) and the ultimate payment of principal on or before the Stated Maturity of December 11, 2027. The ratings on the Class B Notes and Class C Notes address the ultimate payment of interest (excluding the additional 1% of interest payable at the Post-Default Rate as defined in the NPSA) and the ultimate payment of principal on or before the Stated Maturity of December 11, 2027. The provisional rating on the Combination Notes addresses the ultimate repayment of the Combination Note Rated Principal Balance (which is equal to the commitment amount for the Combination Notes) on or before the Stated Maturity of December 11, 2027. The Combination Notes have no stated coupon. The Components of the Combination Notes include portions of the Class A Notes, Class B Notes, and Class C Notes as well as the Subordinated Notes (or equity) of the Issuer.

All interest and principal amounts paid on the Secured Notes and any distributions made to the Subordinated Notes are the only sources of payment for the Combination Notes. All payments made on the Component Notes (whether interest, principal, or otherwise) to the Combination Notes shall reduce the Combination Note Rated Principal Balance. The Combination Notes shall remain outstanding until the earlier of (1) the payment in full and redemption of each Component and (2) the Stated Maturity of each Component.

As of the Closing Date and the Second Amendment, DBRS Morningstar’s rating on the Combination Notes will be provisional. The provisional rating reflects the fact that the effectiveness of the Combination Notes are subject to certain conditions after the Closing Date and Second Amendment, such as a drawing order. It is expected that the Combination Notes will be funded in tandem with, and in proportion to, each Underlying Class but that the Combination Notes will not become effective until each of the Subordinated Notes and other Secured Notes are funded in reverse-sequential order. The finalization of the provisional rating on the Combination Notes will be subject to satisfaction of certain conditions, as specified in the NPSA, including, but not limited to, the remaining unfunded commitments of the Class A Notes, the Class B Notes, and the Class C Notes being reduced to zero. The provisional rating on the Combination Notes may not be finalized if the other Secured Notes fail to be fully drawn.

The principal methodology used to rate the Secured Notes and Combination Notes is “Rating CLOs and CDOs of Large Corporate Credit,” which can be found on www.dbrsmorningstar.com under Methodologies & Criteria. The Combination Notes were stressed by applying the BBB (low) stress scenario under the “Rating CLOs and CDOs of Large Corporate Credit” methodology to the loans securing the Component Notes.

The ratings on the aforementioned Notes are being confirmed pursuant to the execution of the Second Amendment dated as of February 28, 2020 (the Second Amendment Date), among the Issuer; Series I of SVOF/MM, LLC as the Collateral Manager and Purchaser; the Purchasers; and USB as Collateral Agent, Custodian, Document Custodian, Collateral Administrator, Information Agent, and Note Agent.

The Notes will be collateralized primarily by a portfolio of U.S. middle-market corporate loans. The Issuer is managed by Series I of SVOF/MM, LLC, a consolidated subsidiary of Tennenbaum Capital Partners, LLC, which is itself a wholly owned subsidiary of BlackRock, Inc. DBRS Morningstar considers Series I of SVOF/MM, LLC to be an acceptable collateralized loan obligation (CLO) manager.

The confirmation of the ratings reflects the following:

(1) The NPSA dated as of December 11, 2018, and as further amended by the Amendments;
(2) The integrity of the transaction structure;
(3) DBRS Morningstar’s assessment of the portfolio quality;
(4) Adequate credit enhancement to withstand projected collateral loss rates under various cash flow stress scenarios; and
(5) DBRS Morningstar’s assessment of the origination, servicing, and CLO management capabilities of Series I of SVOF/MM, LLC.

To assess portfolio credit quality, DBRS Morningstar provides a credit estimate or internal assessment for each nonfinancial corporate obligor in the portfolio not rated by DBRS Morningstar. Credit estimates are not ratings; rather, they represent a model-driven default probability for each obligor that is used in assigning a rating to the facility.

Under the NPSA, following an Event of Default and the acceleration of the Obligations, the Controlling Parties (as defined in the NPSA) may direct the Collateral Agent to sell all or any portion of the Collateral to the Controlling Parties or any Affiliate of the Controlling Parties, without soliciting or accepting bids therefore from any Person, at the Market Value of such Collateral, which may be at the disadvantage of the other non–Controlling Parties.

Notes:
The principal methodology is Rating CLOs and CDOs of Large Corporate Credit, which can be found on dbrs.com under Methodologies & Criteria.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.

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