Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by Bardin Hill CLO 2021-1 Ltd. (Bardin Hill 2021-1), a cash flow collateralized loan obligation (CLO) backed by a diversified portfolio of broadly syndicated senior secured leveraged loans.
Bardin Hill 2021-1 is managed by Bardin Hill Performing Credit Management LLC (BHPCM or the collateral manager) and will have a five-year reinvestment period. The legal final maturity is on March 15, 2034. The ratings reflect initial credit enhancement levels, excess spread, and coverage tests including overcollateralization ratio and interest coverage tests.
The collateral in Bardin Hill 2021-1 will mainly consist of broadly syndicated senior secured leveraged loans issued by corporate obligors diversified across sectors. The total portfolio par amount is $400 million with exposure to over 250 obligors. The obligors in the portfolio have a K-WARF of 2395, which represents a weighted average portfolio assessment of approximately B. Due to the economic fallout from COVID-19, there may be pressure on overall portfolio credit quality. As such, the portfolio’s K-WARF may increase in the near term. KBRA considered the impact of potential credit migration.
Bardin Hill Investment Partners LP (Bardin Hill) is a global investment management firm that specializes in credit strategies and event-driven equities. Founded in 1981, the firm is headquartered in New York, with offices in London and Luxembourg. The firm has a team of approximately 70 people and is led by 13 partners who average 23 years of industry experience. Bardin Hill has approximately $8.4 billion of assets under management as of December 2020. BHPCM is a subsidiary of Bardin Hill.
KBRA’s preliminary ratings on the Class A Notes consider timely payment of interest and ultimate payment of principal by the applicable stated maturity date. KBRA’s preliminary ratings on the Class C and D Notes consider ultimate payment of interest and principal by the applicable stated maturity date.
KBRA analyzed the transaction using Structured Credit Global Rating Methodology published on November 19, 2020 and the Global Structured Finance Counterparty Methodology published on August 8, 2018.
- Coronavirus (COVID-19): U.S. BSL CLO Sector Exposure Map: December 2020
- Structured Credit Global Rating Methodology
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.
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