Press Release

DBRS Morningstar Assigns a Prov. Rtg of BB to SCF Preferred’s Series A Pref. Shares; Trend Stable

Non-Bank Financial Institutions
August 10, 2021

DBRS, Inc. (DBRS Morningstar) has assigned a Provisional Rating of BB with a Stable trend to the Series A Cumulative Perpetual Preferred Shares to be issued by SCF Preferred Equity, LLC (SCF Preferred). Net proceeds from the issuance will be used for general corporate purposes.

RATING DRIVERS
Consistent expansion in earnings with appropriate returns, while maintaining sound credit and asset performance and balance sheet leverage below 5.0x, would result in an upgrade in the ratings. A significant deterioration in the Company's credit or asset performance, weakening earnings generation, or a reduced cushion relative to its leverage covenant, would lead to a downgrade.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is the Global Methodology for Rating Non-Bank Financial Institutions (September 29, 2020): https://www.dbrsmorningstar.com/research/367510/global-methodology-for-rating-non-bank-financial-institutions. Other applicable methodologies include the DBRS Morningstar Criteria: Preferred Share and Hybrid Security Criteria for Corporate Issuers (November 2, 2020): https://www.dbrsmorningstar.com/research/369165/dbrs-morningstar-criteria-preferred-share-and-hybrid-security-criteria-for-corporate-issuers, and DBRS Morningstar Criteria – Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (February 3, 2021): https://www.dbrsmorningstar.com/research/373262/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.

DBRS Morningstar materially deviated from the Preferred Share and Hybrid Security Criteria for Corporate Issuers methodology when determining the equity treatment for SCF Preferred Equity LLC’s, Series A Cumulative Perpetual Preferred Shares. This methodology is not applicable to nonbanking financial institutions. The material deviation is warranted given the commonalities of preferred shares issued by nonbanking financial institutions and corporates.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

The primary sources of information used for this rating include Company Documents. DBRS Morningstar considers the information available to it for the purposes of providing this rating was of satisfactory quality.

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.

Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are under regular surveillance.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com.

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