Revenue from a pool of middle-market loans will serve as collateral for the Monroe Capital Income Plus ABS Funding II, which will issue about $186 million in notes to investors.
Jeffries & Co is the structuring advisor and manager on the deal, according to a pre-sale report from Kroll Bond Rating Agency and the Asset Securitization Report's deal database. The trust will repay notes through two classes of notes, a $160.7 million, class A, floating-rate notes benchmarked to the three-month Secured Overnight Financing Rate (SOFR), and a $25.1 million of fixed-rate, class B notes, according to KBRA.
The ASR database notes that guidance on the class A notes have come in at around 350 basis points over the 3month SOFR.
Monroe Capital's collateral pool is made up of two types of assets—first-lien, senior secured recurring revenue loans that have maximum loan-to-value (LTV) ratios, and traditional middle-market loans. As for the borrowers, the loans are concentrated among obligors in the software and technology industries that serve a diverse base of end users. Just 15% of end users in the pool are domiciled outside of the U.S., the rating agency said.
The largest sector in the collateral pool accounts for 56.5% of the pool, while the largest three represent 79.3% of the pool, according to KBRA. The notes benefit from internal credit enhancement through subordination, the collateral's borrowing base, and excess spread representing 3.18% of the pool.
KBRA assigns ratings of 'A' to the class A notes and 'BBB' to the class B notes.
