Kroll Bond Rating Agency Europe Limited (KBRA) withdraws ratings upon the redemption of the Class A and Class B notes of SMI Equity Release 2018-1 Designated Activity Company (SMI 2018-1), and issues ratings on new Class A and Class B notes from the same SMI 2018-1 vehicle.
All of the Class A and Class B notes of SMI Equity Release 2018-1 DAC which closed in March 2019 (the “2018 Class A Notes” and “2018 Class B Notes” and together, the “2018 Notes”) were redeemed by the issuer on February 20, 2020. To facilitate the redemption, new Class A notes and Class B notes were issued out of the same SMI Equity Release 2018-1 DAC vehicle (the “2020 Class A Notes” and “2020 Class B Notes” and together, the “2020 Notes”). The 2020 Notes are the subject of this new issuance rating.
KBRA understand that the primary reason for replacing the 2018 Notes with the 2020 Notes is to allow the notes to be cleared (this follows an earlier set of amendments which allowed the notes to be listed). The 2020 Class A Notes are being issued with the same economics as the 2018 Class A Notes, but the interest rates applicable to the 2020 Class B Notes following the initial step-up in March 2023 will be higher than the equivalent interest rates on the 2018 Class B Notes.
The loans comprising SMI 2018-1 were originated by Seniors Money (Ireland) DAC and Seniors Money (Spain) Finance DAC (collectively, SMI). The Euribor-based floating rate loans are generally seasoned more than ten years, with properties predominantly located in Ireland (94.2%), with the remainder in Spain (5.8%). The Spanish properties all have UK obligors. Although SMI originated the loans and has been master servicing the portfolio since the issuance of SMI 2018-1, SMI ceased originations in 2012 following the financial crisis. The group was, during its active period, a leading ERM lender in each market. The original SMI 2018-1 transaction was part of an overall recapitalisation plan for the company.
KBRA’s rating approach incorporates a review and analysis of the loan originator, servicer and other key transaction counterparties, a review of the Agreed Upon Procedure Report, and use of KBRA’s Reverse Mortgage Securitization Global Rating Methodology to analyse collateral and borrower attributes. The analysis also included an assessment of the securitisation framework from a structural and legal perspective, and ongoing surveillance of the transaction.
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Disclosures
Further disclosures relating to this rating action are available in the EU Information Disclosure Form. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
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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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Contacts:
Kali Sirugudi, Senior Director (Lead Analyst)
+44 208 148 1050
ksirugudi@kbra.com