New York, April 25, 2019 -- Moody's Investors Service ("Moody's") has assigned
ratings to four classes of CLO refinancing notes (the "Refinancing
Notes") issued by NewStar Berkeley Fund CLO LLC (the "Issuer").
Moody's rating action is as follows:
U.S.$290,000,000 Class A-R Senior
Secured Floating Rate Notes due 2028 (the "Class A-R Notes"),
Assigned Aaa (sf)
U.S.$51,250,000 Class B-R Senior
Secured Floating Rate Notes due 2028 (the "Class B-R Notes"),
Assigned Aa2 (sf)
U.S.$31,250,000 Class C-R Secured
Deferrable Floating Rate Notes due 2028 (the "Class C-R Notes"),
Assigned A2 (sf)
U.S.$35,000,000 Class D-R Secured
Deferrable Floating Rate Notes due 2028 (the "Class D-R Notes"),
Assigned Baa3 (sf)
RATINGS RATIONALE
The rationale for the rating is based on a consideration of the risk associated
with the CLO's portfolio and structure as described in our methodology.
The Issuer is a managed cash flow collateralized loan obligation (CLO).
The issued notes are collateralized primarily by a portfolio of broadly
syndicated senior secured corporate loans and small and medium enterprise
loans. At least 90.0% of the portfolio must consist
of first lien senior secured loans, cash, and eligible investments,
and up to 10.0% of the portfolio may consist of second liens
loans and unsecured loans.
First Eagle Private Credit, LLC (the "Manager") will direct the
selection, acquisition and disposition of the assets on behalf of
the Issuer and may engage in trading activity, including discretionary
trading, during the transaction's remaining one and a half year
reinvestment period.
The Issuer will issue the Refinancing Notes on April 25, 2019 (the
"Refinancing Date") in connection with the refinancing of
certain classes of secured notes (the "Refinanced Original Notes")
originally issued on November 29, 2016 (the "Original Closing
Date"). On the Refinancing Date, the Issuer will use
the proceeds from the issuance of the Refinancing Notes, to redeem
in full the Refinanced Original Notes. On the Original Closing
Date, the issuer also issued one additional class of secured notes
and one class of subordinated notes that remains outstanding.
In addition to the issuance of the Refinancing Notes, a variety
of other changes to transaction features will occur in connection with
the refinancing. These include: extension of the non-call
period and changes to certain collateral quality tests.
Moody's modeled the transaction using a cash flow model based on
the Binomial Expansion Technique, as described in "Moody's Global
Approach to Rating Collateralized Loan Obligations."
The key model inputs Moody's used in its analysis, such as
par, weighted average rating factor, diversity score and weighted
average recovery rate, are based on its published methodology and
could differ from the trustee's reported numbers. For modeling
purposes, Moody's used the following base-case assumptions
Performing par and principal proceeds balance: $488,478,465
Defaulted par: $16,057,780
Diversity Score: 49
Weighted Average Rating Factor (WARF): 4039 (corresponding to a
weighted average default probability of 33.39%
Weighted Average Spread (WAS): 4.90%
Weighted Average Recovery Rate (WARR): 47.36%
Weighted Average Life (WAL): 6 Years
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was "Moody's Global Approach
to Rating Collateralized Loan Obligations" published in March 2019.
Please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
Factors That Would Lead to an Upgrade or Downgrade of the Ratings:
The performance of the rated notes is subject to uncertainty. The
performance of the rated notes is 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 performance of
the rated notes.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity
analysis, see the sections Methodology Assumptions and Sensitivity
to Assumptions of the disclosure form.
Further information on the representations and warranties and enforcement
mechanisms available to investors are available on http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBS_1171898.
The analysis relies on an assessment of collateral characteristics to
determine the collateral loss distribution, that is, the function
that correlates to an assumption about the likelihood of occurrence to
each level of possible losses in the collateral. As a second step,
Moody's evaluates each possible collateral loss scenario using a
model that replicates the relevant structural features to derive payments
and therefore the ultimate potential losses for each rated instrument.
The loss a rated instrument incurs in each collateral loss scenario,
weighted by assumptions about the likelihood of events in that scenario
occurring, results in the expected loss of the rated instrument.
Moody's quantitative analysis entails an evaluation of scenarios
that stress factors contributing to sensitivity of ratings and take into
account the likelihood of severe collateral losses or impaired cash flows.
Moody's weights the impact on the rated instruments based on its
assumptions of the likelihood of the events in such scenarios occurring.
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 credit rating action on the support provider and in relation to
each particular credit 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 credit rating action,
and whose ratings may change as a result of this credit 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.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
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.
Kristen Contrera
Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Ramon O. Torres
Senior Vice President/Manager
Structured Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
