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Rating Action:

Moody's assigns rating to two classes of amended notes and additional notes issued by Golub Capital BDC 2010-1 LLC

15 Feb 2013

New York, February 15, 2013 -- Moody's Investors Service announced that it has assigned the following ratings to outstanding notes amended, and additional notes issued, by Golub Capital BDC 2010-1 LLC ("Golub 2010-1" or the "Issuer"):

U.S. $203,000,000 Amended and Restated Class A Senior Secured Floating Rate Notes due 2023 (the "Class A Notes"), Assigned Aaa (sf), and

U.S. $12,000,000 Amended and Restated Class B Senior Secured Floating Rate Notes due 2023 (the "Class B Notes"), Assigned Aa1 (sf).

RATINGS RATIONALE

Moody's ratings of the Class A Notes and the Class B Notes (together, the "Notes") is based on the expected loss of the notes. The ratings reflect the risks due to defaults on the underlying portfolio of loans, the transaction's legal structure, and the characteristics of the underlying assets. The ratings address the ultimate receipt of interest and principal payments on the Notes, as required by the transaction's governing documents.

Golub 2010-1 is an existing cash-flow small-to-medium enterprise ("SME") collateralized loan obligation transaction that previously issued, in July 2010, the original Class A Notes and Class B Notes. With the execution of a supplemental indenture, Golub 2010-1 is upsizing the transaction and amending and restating the Class A Notes and the Class B Notes.

The Notes are collateralized substantially by SME first-lien senior secured corporate loans. At least 95% of the portfolio must consist of first-lien senior secured loans or eligible investments and up to 5% of the portfolio may consist of second lien loans. With the issuance of the Additional Notes, the underlying portfolio is approximately 85% ramped and currently has a weighted average life of approximately 4.00 years.

Golub Capital Advisors (the "Manager") will continue to direct the selection, acquisition and disposition of collateral on behalf of the Issuer and may engage in trading activity, including discretionary trading, during the transaction's remaining 2.5 year reinvestment period, which reflects a two-year extension of the original reinvestment period pursuant to the supplemental indenture. Thereafter, the Manager may continue to sell defaulted securities and other securities subject to certain conditions, but may not reinvest in additional collateral obligations.

The transaction incorporates a par coverage test which, if triggered, diverts interest and principal proceeds to pay down the notes in order of seniority.

Moody's modeled the transaction using a cash flow model based on the Binomial Expansion Technique, as described in Section 2.3 of the "Moody's Approach to Rating Collateralized Loan Obligations" rating methodology published in June 2011. Moody's used the following base-case modeling assumptions:

Diversity Score: 34

Weighted Average Rating Factor (WARF): 3610

Weighted Average Spread (WAS): 5.4%

Weighted Average Coupon (WAC): 7.5%

Weighted Average Recovery Rate (WARR): 41%

Weighted Average Life (WAL): 6.25 years

The Notes' performance is subject to uncertainty. It will be sensitive to the performance of the underlying portfolio, which in turn depends on economic and credit conditions that may change. The Manager's investment decisions and management of the transaction will also affect the Notes' performance.

Together with the set of modeling assumptions above, Moody's conducted an additional sensitivity analysis which was an important component in determining the ratings assigned to the Notes. This sensitivity analysis includes increased default probability relative to the base case. Below is a summary of the impact of an increase in default probability (expressed in terms of WARF level) on the Notes (shown in terms of the number of notch difference versus the current model output, whereby a negative difference corresponds to higher expected losses), holding all other factors equal:

Percentage Change in WARF

WARF + 15% (to 4151 from 3610)

Class A Note: -1

Class B Note: -2

WARF +30% (to 4693 from 3610)

Class A Note: -2

Class B Note: -3

The V Score for this transaction is Medium/High. Moody's assigned this V Score in a manner similar to the Medium/High V Score assigned for the global cash flow CLO sector, as described in the special report titled "V Scores and Parameter Sensitivities in the Global Cash Flow CLO Sector," dated July 6, 2009, available on www.moodys.com. A significant portion of the underlying assets for this transaction are SME corporate loans, which receive Moody's credit estimates, rather than publicly rated corporate loans. This distinction is an important factor increasing potential rating sensitivity in the determination of this transaction's V Score, since only loans publicly rated by Moody's are the basis for the CLO V Score Report.

Several scores for sub-categories of the V Score differ from the CLO sector benchmark scores. The scores for the quality of historical data for U.S. SME loans and for disclosure of collateral pool characteristics and collateral performance reflect higher volatility. This results from lack of a centralized default database for SME loans, as well as obligor-level information for SME loans being more limited and less frequently provided to Moody's than that for publicly-rated companies. In addition, the score for alignment of interests reflects lower volatility since the transaction is a financing vehicle.Moody's V Scores provide a relative assessment of the quality of available credit information and the potential variability around the various inputs to a rating determination. The V Score ranks transactions by the potential for significant rating changes owing to uncertainty around the assumptions due to data quality, historical performance, the level of disclosure, transaction complexity, the modeling and the transaction governance that underlie the rating. V Scores apply to the entire transaction, rather than individual tranches.

The principal methodology used in this rating was "Moody's Approach to Rating Collateralized Loan Obligations," published in June 2011. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

Moody's did not receive or take into account a third-party assessment on the due diligence performed regarding the underlying assets or financial instruments in this transaction.

Further information on the representations and warranties and enforcement mechanisms available to investors are available on http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF316090.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

David H. Burger
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Leon Mogunov
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns rating to two classes of amended notes and additional notes issued by Golub Capital BDC 2010-1 LLC
No Related Data.
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