KBRA, a renowned credit rating agency, has assigned a preliminary rating to a class of notes from NBC Funding LLC, known as Series 2024-1 Notes. This development comes as NBC 2024-1 plans to refinance its NBC 2023-1 A-1-VFN Notes. Once this refinancing occurs, KBRA will withdraw the rating for NBC 2023-1 A-1-VFN Notes, while also affirming the ratings for the Issuer’s existing notes including the Series 2021-1 Class A-1-VFN Notes and the Series 2021-1 Class A-1-LR Notes, Series 2021-1 A-2 Notes, and Series 2021-1 B Notes.
The preliminary ratings given by KBRA align with the outcome of their meticulous cash flow analysis following the inclusion of the Series 2024-1 Notes.
It is worth noting that the cash flows generated by this transaction largely stem from top-line payments sourced from franchise locations and corresponding distribution profits. These top-line payments incorporate securitized collections from franchise royalty revenues and the Company’s product distribution profits. Additionally, revenues from company-operated locations, fees, and other sources contribute to the remaining collections.
For those interested in accessing the rating and relevant documents related to this development, they can click the provided link in the original article.
KBRA emphasizes the importance of key credit considerations and sensitivity analyses that influence credit ratings and could potentially lead to an upgrade or a downgrade. Moreover, they acknowledge the significance of environmental, social, and governance (ESG) factors in relation to changes in credit ratings or rating outlooks. For a comprehensive understanding of these factors, readers are encouraged to refer to the detailed rating report mentioned above.
Transparency is a crucial aspect in the credit rating process. Therefore, KBRA provides information about all substantially material sources used to prepare the credit rating, as well as details regarding the methodologies employed to determine the rating. Interested individuals can find this information in the Information Disclosure Form(s) available through the provided link.
KBRA’s recognition as a reputable credit rating agency stems from its compliance with regulatory bodies. It is registered with the U.S. Securities and Exchange Commission as an NRSRO and holds CRA registrations with the European Securities and Markets Authority and the UK Financial Conduct Authority. Furthermore, KBRA is designated as a rating organization by the Ontario Securities Commission and is acknowledged by the National Association of Insurance Commissioners as a reliable Credit Rating Provider.
For more information about KBRA’s policies, methodologies, rating scales, and disclosures, interested parties can visit their official website at www.kbra.com.
In addition to the information provided in the article, there are several current market trends and key challenges associated with the subject of KBRA’s preliminary rating for NBC Funding LLC, Series 2024-1 Notes.
1. Market Trends:
– Increasing demand for securitized financial instruments: Securitization has become a popular financing method for companies in various industries, including the franchise and distribution sector. The market trend shows a rise in the demand for securitized financial instruments like the Series 2024-1 Notes.
– Focus on environmental, social, and governance (ESG) factors: There is a growing emphasis on considering ESG factors in credit ratings and rating outlooks. Investors are increasingly interested in companies that demonstrate strong ESG practices, which can impact their creditworthiness.
2. Forecasts:
– Continued growth in the franchise industry: The franchise industry is expected to continue its growth trajectory, driven by factors such as consumer demand for established brands and the scalability of franchise models. This growth can positively impact the creditworthiness of franchise-related securitizations, including the NBC Funding LLC, Series 2024-1 Notes.
3. Key Challenges and Controversies:
– Volatility in the market: The financial markets can be volatile, and economic downturns or disruptions can impact the credit quality of securitized instruments. Investors should be aware of the potential risks associated with market volatility and assess the resilience of the underlying assets supporting the securitization.
– Regulatory scrutiny: Credit rating agencies, including KBRA, operate in a regulated environment and are subject to scrutiny by regulatory bodies. Compliance with regulations and maintaining reputation as a trusted rating agency are ongoing challenges faced by KBRA.
Advantages and disadvantages of the subject can be discussed as follows:
Advantages:
– Refinancing opportunity: The issuance of Series 2024-1 Notes provides NBC Funding LLC with the opportunity to refinance its existing notes, potentially improving its financial position and reducing borrowing costs.
– Cash flow stability: The cash flows generated by the securitized collections from franchise royalty revenues and product distribution profits provide a stable source of income for NBC Funding LLC, enhancing the creditworthiness of the securities.
Disadvantages:
– Dependency on franchise industry performance: The creditworthiness of the NBC Funding LLC, Series 2024-1 Notes is linked to the performance of the franchise industry. Any negative trends or challenges in the franchise sector could impact the cash flows and ultimately the credit quality of the securities.
– Market and economic risks: As with any securitization, the value and performance of the Series 2024-1 Notes can be influenced by market and economic conditions. Fluctuations in interest rates, changes in consumer behavior, and macroeconomic factors can create risks for investors.
Related links:
– KBRA’s official website: KBRA
– U.S. Securities and Exchange Commission (SEC): SEC
– European Securities and Markets Authority (ESMA): ESMA
– UK Financial Conduct Authority (FCA): FCA