Rating uninsured structured transactions backed by single corporate loans to the triple- A level has, until now, has not been possible. But Standard & Poor's has developed criteria that illustrate how issuers can employ structures that blend recovery and CMBS expertise.
These hybrid deals, coined corporate market value securitization (MVS), would involve the securitizing corporate loans through a special-purpose entity, with notes issued into the capital markets that are backed by the loan and, ultimately, the borrowing corporate entity's business assets. The S&P rating analysis considers both the default of the underlying loan, and the recovery proceeds from the sale of the underlying assets post-default. The proceeds from the sale are used to repay the rated debt.