NEW YORK--(EON: Enhanced Online News)--Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of debt ("the Debt”) issued by Elm 2016-1 Trust. The Initial Loans were originated by MidCap Financial Trust (“the Originator”) and will be serviced by MidCap Financial Services Capital Management, LLC (“MidCap Financial” or “the Servicer”). This transaction is the inaugural securitization for the Originator and Servicer, collectively referred to as “MidCap” or “the Company.”
Founded in 2008, MidCap is a middle market-focused, specialty finance firm that provides senior debt solutions to companies across all industries. The Company provides a broad array of products intended to finance growth and manage working capital. MidCap has a focus on the direct origination of life sciences loans, real estate loans, asset-backed loans and leveraged loans.
The Debt will be secured by an initial pool (“the Initial Loans”) comprised primarily of (i) senior term loans to life sciences companies (“the Life Sciences Loans”) and (ii) funded pari passu participations in senior secured real estate loans (“Real Estate Loans”). As of November 1, 2016, the composition of the statistical loans (“the Statistical Pool”) will consist of 35 loans to 35 obligors with an aggregate outstanding loan balance of approximately $314.6 million (“Statistical Pool Balance”). The exposures to Life Sciences Loans and Real Estate Loans will be approximately 85.3% and 14.7% of the Statistical Pool Balance, respectively.
The transaction benefits from sufficient credit enhancement and liquidity, as well as a dynamic structure that accelerates principal payments on the Debt in the event of weak performance. The transaction features a 24-month reinvestment period during which time principal collections may be reinvested in additional loans that meet certain eligibility criteria.
KBRA analyzed the transaction using KBRA’s General Rating Methodology for Asset-Backed Securities published on July 30, 2012.
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Representations and Warranties Disclosure
All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC Rule 17g-7, to provide a description of a transaction’s representations, warranties and enforcement mechanisms that are available to investors when issuing credit ratings. KBRA’s disclosure for this transaction can be found in the report entitled Disclosure is available at the following link: Elm 2016-1 Trust Representations and Warranties Disclosure.
Related Publications: (available at www.kbra.com)
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