DRI Capital is marketing a $220 million securitization of 18 drug royalty streams generated from the global sales of 11 drugs.
The deal, called Series 2012-2 is the second deal for DRI Capital this year, according to Moody’s Investors Service. The ratings agency rated both the earlier March deal and the issuer’s latest deal.
Series 2012-2 is structured with a single tranche of floating rate notes and one fixed rate tranche, which have both been assigned a provisional rating of ‘Baa2’ by Moody’s. Standard & Poor’s has assigned the deal a preliminary ‘BBB’ rating.
According to a Moody’s presale report, the royalty payments will come from a moderately diversified portfolio with a mix of pharmaceutical products that target diversified ailments with a concentration in drugs specifically targeting auto-immune diseases. The top 3 drugs -- Tysabri, Sensipar and Remicade -- constitute 63.9% of the portfolio.
But the drugs, according to the report, are well seasoned in various markets and the marketers of the drugs in the portfolio; include some of the world's leading pharmaceutical companies.
“Mitigating the lack of diversification at the top are the length of time that each drug has been on the market since getting its regulatory approval (over 6.3, 5 and 14.2 years in market
respectively), recognition of the efficacy of these drugs in addressing specific chronic ailments as reflected in their sales, manageable competitive threats over the period during which most cash flows will be received and the strong credit quality of their marketers,” explained analysts in the presale report.