DBRS Assigns Provisional Ratings to Certain Muskoka Series 2019-1 Notes to Be Issued by Manitoulin USD Ltd.

DBRS, Inc. (DBRS) assigned the following provisional ratings to the Muskoka Series 2019-1 Class B Guarantee Linked Notes (the Class B Notes), the Muskoka Series 2019-1 Class C Guarantee Linked Notes (the Class C Notes) and the Muskoka Series 2019-1 Class D Guarantee Linked Notes (the Class D Notes; together, with the Class B Notes and Class C Notes, the Notes) contemplated to be issued by Manitoulin USD Ltd. (Manitoulin or the Issuer) referencing the executed Junior Loan Portfolio Financial Guarantee (the Financial Guarantee) to be dated on or about January 30, 2019, between Manitoulin as Guarantor and the Bank of Montreal (rated AA with a Stable trend by DBRS) as Beneficiary with respect to a portfolio of primarily U.S. and Canadian senior secured and senior unsecured loans:

-- Class B Notes at A (sf)
-- Class C Notes at BBB (low) (sf)
-- Class D Notes at BB (sf)

The provisional ratings on the Notes address the timely payment of interest and ultimate payment of principal on or before the Scheduled Termination Date (as defined in the Financial Guarantee referenced above). The payment of the interest due to the Notes is subject to the Beneficiary’s ability to pay the Guarantee Fee Amount (as defined in the Financial Guarantee referenced above).

To assess portfolio credit quality, for each corporate obligor in the portfolio, DBRS relies on DBRS ratings and public ratings from other rating agencies or DBRS may provide a credit estimate, internal assessment or ratings mapping of the Beneficiary’s internal ratings model. Credit estimates, internal assessments and ratings mappings are not ratings; rather, they represent an abbreviated analysis, including model-driven or statistical components of default probability for each obligor that is used in assigning a rating to a facility sufficient to assess portfolio credit quality.

On the Effective Date (as defined in the Financial Guarantee referenced above), the Issuer will utilize the proceeds of the issue of the Notes to make a deposit into the Cash Deposit Accounts with the Cash Deposit Bank. DBRS may review the ratings on the Notes in the event of a downgrade of the Cash Deposit Bank below certain thresholds, as defined in the transaction documents.

The ratings reflect the following:

(1) The draft Financial Guarantee to be dated on or about January 30, 2019.
(2) The integrity of the transaction structure.
(3) DBRS’s assessment of the portfolio quality.
(4) Adequate credit enhancement to withstand projected collateral loss rates.

Notes:
The principal methodologies are Rating CLOs and CDOs of Large Corporate Credit and Mapping Financial Institution Internal Ratings to DBRS Ratings for Global Structured Credit Transactions, which can be found on dbrs.com under Methodologies & Criteria.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.

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