KBRA Assigns Preliminary Ratings to VCP RRL ABS I, Ltd.

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to three classes of notes issued by VCP RRL ABS I, Ltd. (“VCP RRL I”), a securitization backed by a portfolio of recurring revenue and middle market corporate loans.

VCP RRL I is a $439.7 million securitization managed by Vista Credit Partners, L.P. (“VCP” or the “Collateral Manager”), an investment adviser and affiliate of Vista Equity Partners (collectively, with these affiliates and other funds managed by them and their affiliates “Vista”). The securitization consists of $285.8 million Class A fixed-rate notes, $39.5 million Class B fixed-rate notes, $35.2 million Class C fixed-rate notes, and $79.2 million Subordinated Notes, which expect to receive payments from a static portfolio of recurring revenue loans (“RRLs”) and middle market loans (“MMLs”). The maximum Advance Rate is 65.0% for the Class A notes, 74.0% for the Class B Notes, and 82.0% for the Class C notes. The ratings reflect initial credit enhancement levels, excess spread, and structural features.

Vista’s recurring revenue lending strategy focuses on first-lien senior secured loans to enterprise software 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 3566, which represents a weighted average portfolio assessment between B- and CCC+. The portfolio presented to KBRA contains exposures to 43 obligors with 65.3% of the par exposure to the RRLs. There may be pressure on portfolio credit quality due to macroeconomic conditions. As such, the portfolio’s K-WARF may increase in the near-term which KBRA considered in its analysis.

Vista Credit Partners is an investment adviser established in 2013 as a financing partner for enterprise software businesses. As a subsidiary of Vista Equity Partners (‘VEP’), VEP provides accounting, operational and administrative services to VCP. The collateral manager will also leverage the VEP platform, including its investment professionals and other resources. Founded in 2000, VEP has $77 billion in capital under management as of January 1, 2021, with $4.5 billion in credit.

KBRA’s preliminary ratings on the Class A and B Notes consider the timely payment of interest and ultimate payment of principal by the applicable stated maturity date, whereas KBRA’s rating on the Class C Notes consider ultimate payment of interest and principal by the applicable stated maturity date.

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

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Disclosures

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.

About KBRA

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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