Kroll Bond Rating Agency (KBRA) assigned a rating to one class of notes issued by Golub Capital Partners ABS Funding 2019-1, L.P. (GCPAF 2019-1), a securitization backed by a portfolio of recurring revenue and middle market corporate loans. GCPAF 2019-1 is being amended to refinance to the existing notes, issue new notes to upsize the transaction, and extend key transaction dates.

The original Class A Notes are being redeemed in accordance with the transaction documents which describe the note refinancing. KBRA’s rating on the original Class A Notes is being withdrawn in connection with the execution of the refinancing and redemption.

GCPAF 2019-1 is a $550.0 million securitization managed by GC Investment Management LLC (“GCIM” or the “Collateral Manager”), an investment adviser and affiliate of GC Advisors LLC (collectively, with these affiliates and other funds managed by them and their affiliates “Golub Capital”). The securitization consists of $346.5 million Class A-R Notes and $206.4 million subordinated Notes, which expect to receive payments from a portfolio of recurring revenue loans (“RRLs”) and middle market loans (“MMLs”). The reinvestment period is approximately two years from the closing date. The rating reflects initial credit enhancement levels, excess spread, and structural features.

Golub Capital’s recurring revenue lending strategy focuses on first-lien senior secured loans to software and health care service companies with a minimum level of recurring revenue and low loan-to-value ratios. Despite the low level of earnings, the obligors in the portfolio usually have strong liquidity profiles and loan covenants. The overall K-WARF of the portfolio is 3651, which represents a weighted average portfolio assessment between B- and CCC+. The portfolio presented to KBRA contains exposures to 51 obligors with 73.8% of the par exposure to the RRLs.

GC Investment Management LLC is an investment adviser established in 2010. GCIM is a USVI company providing investment management, fund accounting, operational and administrative services to manage certain of Golub Capital’s offshore funds. Through services agreements, the collateral manager will leverage the Golub Capital platform, including its investment professionals and other resources. Founded in 1994, Golub Capital has over $35 billion in capital under management as of January 1, 2021 with over $30 billion in middle market direct lending and over $5 billion in broadly syndicated leveraged loans.

KBRA’s rating on the Class A-R Notes considers timely payment of interest and ultimate payment of principal by the applicable stated maturity date.

KBRA analyzed the transaction using Structured Credit Global Rating Methodology and the Global Structured Finance Counterparty Methodology.