Capital Royalty is the latest firm to tap the securitization market to fund venture capital loans to healthcare product and service companies, according to Kroll Bond Rating Agency.
CRG Issue 2015-1 will issue $160 million of 'A-' rated debt secured by a $294 million portfolio of 17 fixed-rate loans. Most of the exposure is to three sectors within healthcare: diagnostic, medical device and pharmaceutical companies.
Houston, TX based CRG provides financing to healthcare companies with significant collateral value. Many of the loans originated by the sponsor and pooled under CRG Issue 2015-1 are underwritten to companies that have a limited operating history but have completed multiple rounds of funding.
The loans are secured by tangible and intangible assets of the borrowers that include equipment, inventor, cash, account receivables and intellectual property.
The bonds are structured with a 54.4% advance rate and mature on April 2022. The notes benefit from over collateralization and feature a cash reserve account that will be funded through future collection that has a targeted balance of 5% of the current balance of the notes.
During the first 18 months of the transaction, the cash flows from principal collections may be reinvested to acquire more loans that meet certain eligibility criteria.