KBRA Assigns Preliminary Ratings to Blackstone Diversified Alternatives Issuer L.L.C.

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings of “A” to
the $493 million Class A Notes and “BBB” to the $148 million Class B
Notes of Blackstone Diversified Alternatives Issuer L.L.C. (the
“Issuer”). The preliminary ratings reflect the Issuer’s Preliminary
Rating (“P KScore”) as measured by the key Rating Determinants,
including the Primary Quantitative Rating (“PQR”), based on the KBRA
Credit Quality Rating Matrix (as measured by the expected asset
composition and assessment of the underlying instruments that are
anticipated to comprise the portfolio); Asset Coverage; Liquidity; and
Duration. Additionally, the rating is influenced by the results of the
qualitative assessment of The Blackstone Group L.P. and its affiliates
(“Blackstone”), including the investment advisors of the underlying
investment funds and strategies in which the Issuer will participate.
The qualitative shadow rating (“QSR”) of the investment advisor was
found to be strong. This produced a “A” preliminary rating for the Class
A Notes, and after a priority of payment adjustment, a “BBB” preliminary
rating for the Class B Notes. The preliminary rating reflects KBRA’s
opinion regarding the likelihood of timely payment of interest and
ultimate payment of principal.

Including the proceeds raised from the issuance of the Class A Notes,
the Class B Notes and the equity of the Issuer, the Issuer’s overall
Portfolio is targeted at up to approximately $1.0 billion in size. The
investment objective of the Issuer is to provide purchasers of the
Issuer’s notes and equity with an opportunity to invest in a diversified
set of Blackstone-managed alternative products.

Each of the Class A Notes and the Class B Notes have a scheduled
maturity of 10 years, with a final maturity of 20 years. The Class A
Notes are currently expected to carry a fixed 5.25% coupon per annum and
the Class B Notes are currently expected to carry a fixed 6.25% coupon
per annum, in each case payable semi-annually. Noteholders and Liquidity
Facility Providers are secured by a perfected first priority security
interest in all of the Issuer’s assets and accounts.

KBRA’s analysis of the transaction considered the strong diversification
of portfolio assets across asset classes, industries and geographies;
strong levels of dedicated liquidity which provide coverage for debt
service even under stress scenarios, including a committed, senior
secured liquidity facility and a required minimum aggregate balance of
money market fund holdings. Additionally, the analysis considered the
substantial asset coverage supporting the issuance in the form of an
initial 50% credit enhancement for Class A Notes and 35% credit
enhancement for Class B Notes.

Blackstone is a well-known, respected name in the alternative investment
space, with a 30-year, observable track record. Blackstone manages
investment vehicles focused on private equity, real estate, public debt
and equity, non-investment grade credit, real assets and secondary
funds, all on a global basis. Blackstone was established in 1985 and, as
of December 31, 2018, Blackstone has $472 billion of assets under
management (AUM) and approximately 2,500 employees, with offices
globally.

For complete details on the analysis, click here
or visit www.kbra.com.

Related Publications: (available at www.kbra.com)

• Blackstone
  Diversified Alternatives Issuer L.L.C. Rating Report

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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.

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