TMCnet News
KBRA Assigns Preliminary Rating to Gracie Point International Premium Funding 2017-I, Series 2018-A Notes (Draw No. 2)Kroll Bond Rating Agency (KBRA) assigns preliminary rating to the Series 2018-A, Class I Notes (Draw No. 2) issued by Gracie Point International Premium Funding 2017-I, Series 2018-A Notes (Draw No. 2). The rating listed below is for $14,497,000 of the Gracie Point International Premium Funding 2017-I, Series 2018-A Notes, Class I Notes draw number 2 (the "Draw No. 2 Notes"). In addition, the rating for the previously issued $13,905,000 Series 2018-A Notes, Class I Notes (the "Draw No. 1 Notes") will be confirmed in conjunction with the issuance of the Draw No. 2 Notes. The rating listed below for the Draw No. 2 Notes is preliminary and subsequent information may result in the assignment of a final rating that differs from the preliminary ratings. The rating for the Draw No. 1 Notes are final. KBRA will provide a rating on only the Class I Notes. This report does not constitute a recommendation to buy, hold, or sell securities. KBRA rating represents the timely payment of interest and ultimate payment of principal of the Class I Notes by the Stated Maturity Date. KBRA's complete analysis including a discussion of Key Credit Considerations is included in Gracie Point International Premium Funding 2017-I, Series 2018-A. This transaction is part of Gracie Point, LLC's ("Gracie Point", the "Company" or the "Sponsor") third securitization. The Company has completed a total of four securitizations. Gracie Point International Premium Funding 2017-I (the "Issuer") will issue the Series 2018-A Multi Draw Notes (the "Series 2018-A Notes") in two classes: Class I ("Class I Notes") and Class II ("Class II Notes", jointly referred to as the "Notes"). The Issuer previously issued the Draw No. 1 Notes on April 5, 2018 (the "Draw No. 1 Closing Date") and additional information can be found in the report located here. The Draw No. 2 Notes will have the same terms as the Draw No. 1 Notes, including same Note Rate, Maximum Advance Rate and Stated Maturity Date. The Issuer will issue the Draw No. 2 Notes only in one class: the Class I Notes. After the Draw No. 2 Notes are issued the balance of Class I Notes will be $28,402,000 and additional Class I Notes may be subsequently offered periodically (each, a "Draw") pursuant to an addendum up to a maximum amount of $100,000,000 if certain condition precedents are met. On the Draw No. 1 Closing Date, the Issuer issued the full amount of $2,500,000 of the Class II Notes, which Gracie Point will retain. No additional Class II Notes will be issued. The unrated Class II Notes are fully subordinated to the rated Class I Notes. Proceeds of the Notes will be used to purchase participation interests ("Participations") in premium finance loans (each, a "Premium Finance Loan") made by Gracie Point International, Limited (the "Premium Finance Lender"), to British Virgin Islands exempted companies limited by shares (each, an "Eligible Premium Finance Borrower" or "Borrower"). The Series 2018-A Reserve Account was previously funded on the Draw No. 1 Closing Date with $500,000 to support payments on capped administrative expenses and interest and principal payments on the Class I Notes. All Borrowers will be formed to ensure that such Borrowers are bankruptcy remote. Gracie Point is the sole equity owner of the Premium Finance Lender (which in turn is the sole equity owner of the Issuer), and will serve as the administrator of the Premium Finance Loans. The Class I Notes will be secured by a portfolio of 13 Premium Finance Loans to Eligible Premium Finance Borrowers with four life insurance companies. Each Premium Finance Loan will be at least 100% collateralized by a combination of (i) one or more life insurance policies issued by eligible life insurance carriers (each, an "Eligible Life Insurance Company") having a minimum cash surrender value ("CSV") and (ii) cash, if needed. Each Eligible Life Insurance Company has minimum ratings guidelines, as described in the report located here. In addition, each Borrower is required to reserve three months of accrued and unpaid interest on such Premium Finance Loan plus six months of forward interest on such Premium Finance Loan. The 13 Premium Finance Loans with four Eligible Life Insurance Company have a current aggregate premium finance loan amount of $30,452,377. The Notes have an expected maturity date (the "Expected Maturity Date") of September 2, 2019, and a stated maturity date (the "Stated Maturity Date") of March 1, 2020, which is approximately 6 months after the Expected Maturity Date. The initial issuance date was the Draw No. 1 Closing Date and subsequent issuance dates can occur throughout the issuance period (the "Issuance Period") which ends twelve months after the Draw No. 1 Closing Date. If principal collections are received by the Issuer during the Issuance Period and such principal collections are applied on any payment date to repay principal on the Class I Notes, then the Issuance Period will end on such payment date or reserved to purchase additional Participations. Although the Premium Finance Loans have tenors as long as 20 years, the Issuer should have sufficient funds to repay the principal on the Notes at the Stated Maturity Date because, to the extent the Premium Finance Lender is unable to refinance the Premium Finance Loans prior to the Notes' Expected Maturity Date, the Premium Finance Lender have the right, pursuant to the loan documents with the Borrowers, to demand payment on, and take possession of the collateral related to, the Premium Finance Loans. The Premium Finance Loans accrue interest at either the 3-month LIBOR or 1-month LIBOR rate plus an applicable spread and the Notes accrue interest at the 3-month LIBOR rate plus an applicable spread. It is also possible the Premium Finance Loans and Notes may reset on different days during the quarter. In order to mitigate any potential mismatch between 1-month LIBOR on the Premium Finance Loans and 3-month LIBOR on the Notes or potential mismatch between 3-month LIBOR rates on the assets and liabilities and any other risks relating to timely payment of interest on the underlying Premium Finance Loans, the Sponsor has deposited $500,000 into a reserve account (the "Series 2018-A Reserve Account") on the Draw No. 1 Closing Date which will be available to pay interest on the Notes in the event of an interest shortfall and capped administrative expenses which are paid senior to interest payments on the Class I Notes. For any future Draw or purchase of a Participation, the transaction includes an Additional Interest Reserve Requirement detailed in the report located here. KBRA analyzed the transaction using the Global General Rating Methodology for Asset-Backed Securities published on November 28, 2017 and Global Insurer & Insurance Holding Company Rating Methodology published on October 10, 2017. For complete details on the analysis, please see KBRA's pre-sale report, Gracie Point International Premium Funding 2017-I, Series 2018-A Notes (Draw No. 2) Pre-Sale Report, which was published today at www.kbra.com. The preliminary rating is based on information known to KBRA at the time of this publication. Information received subsequent to this release could result in the assignment of a final rating that differ from the preliminary rating. Representations & Warranties Disclosure All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC (News - Alert) 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 available Gracie Point International Premium Funding 2017-I, Series 2018-A Representations and Warranties Disclosure. Related Publications: (available at www.kbra.com)
CONNECT WITH KBRA
Twitter About KBRA and KBRA Europe KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. 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, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA. View source version on businesswire.com: https://www.businesswire.com/news/home/20180816005489/en/ |
