NEW YORK--(BUSINESS WIRE)--Kroll Bond Rating Agency (KBRA) assigns a preliminary rating to the Class I Notes issued by Gracie Point Premium Financing 2017-I, Series 2017-A.
This transaction is Gracie Point, LLC’s (“Gracie Point”, the “Company” or the “Sponsor”) inaugural securitization. Gracie Point Premium Financing 2017-I (the “Issuer”) will issue the Series 2017-A Secured Floating Rate Notes (the “Series 2017-A Notes”) in two Classes: Class I (“Class I Notes”) and Class II (“Class II Notes”, jointly referred to as the “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 Premium Funding, LLC or Gracie Point Premium Funding, Inc. (together, the “Premium Finance Lenders”), to irrevocable life insurance trusts or other entities. Gracie Point is the sole equity owner of the Premium Finance Lenders and will serve as the administrator of the Premium Finance Loans.
The Notes will be secured by a portfolio of 15 Premium Finance Loans to borrowers (each an “Eligible Premium Finance Borrower” or “Borrower”). Each Premium Finance Loan will be at least 100% collateralized by a combination of (i) one or more life insurance policies issued by a life insurance carrier (each, an “Eligible Life Insurance Company”) having a minimum cash surrender value (“CSV”), (ii) cash and/or (iii) a letter of credit issued by an eligible U.S. domiciled bank meeting the minimum rating guidelines (each, an “Eligible Letter of Credit Issuer”). Each Eligible Life Insurance Company and Eligible Letter of Credit Issuer has minimum ratings guidelines, as described further within. In addition, each Borrower is required to reserve nine months of forward interest on such Premium Finance Loan. The 15 Premium Finance Loans with 10 Eligible Life Insurance Companies have a current aggregate premium finance loan amount of $21,060,000.
The Notes have an expected maturity date of 12 months from the closing date (the “Expected Maturity Date”) and a stated maturity date of 18 months from the closing date (the “Stated Maturity Date”). 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 Lenders are not able to find lenders willing to refinance the Premium Finance Loans prior to the Notes’ Expected Maturity Date, the Premium Finance Lenders 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.
KBRA analyzed the transaction using the General Rating Methodology for Asset-Backed Securities published on July 30, 2012 and Global Insurer & Insurance Holding Company Rating Methodology published on April 21, 2016.
For complete details on the analysis, please see KBRA’s Pre-Sale Report, Gracie Point Premium Financing 2017-I, Series 2017-A 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 final rating that differ from the preliminary rating.
| Class | Preliminary Rating | Initial Principal Amount | ||||
| Class I Notes | A (sf) | $20,638,000 | ||||
| Class II Notes | NR | $422,000 | ||||
Representations & Warranties Disclosure
All Nationally Recognized Statistical Rating Organizations are required, pursuant to SEC 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 entitled Gracie Point Premium Financing 2017-I Representations and Warranties Disclosure.
Related Publications: (available at www.kbra.com)
- General Rating Methodology for Asset-Backed Securities
- Global Insurer & Insurance Holding Company Rating Methodology
- Gracie Point Premium Financing 2017-I, Series 2017-A Pre-Sale Report
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About Kroll Bond Rating Agency
KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).
