Kroll Bond Rating Agency 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 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 that 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 KBRA’s rating on the original Class A notes is being withdrawn in connection with the execution of the refinancing and redemption.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 million securitization managed by GC Investment Management, an investment adviser and affiliate of GC Advisors LLC (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 and middle-market loans. 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 healthcare 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.