DBRS Assigns Provisional Ratings and New Ratings to Notes to Be Issued by BlackRock DLF IX 2019 CLO, LLC

DBRS, Inc. (DBRS) assigned provisional ratings of AAA (sf) to the Class A-1 Notes and BBB (low) (sf) to the Combination Notes to be issued by BlackRock DLF IX 2019 CLO, LLC (BlackRock IX CLO or the Issuer), as well as assigned new ratings of AA (sf) to the Class A-2 Notes, A (sf) to the Class B Notes, BBB (sf) to the Class C Notes, BB (sf) to the Class D Notes and B (sf) to the Class E Notes issued by BlackRock IX CLO, pursuant to the Note Purchase and Security Agreement (NPSA) dated as of August 30, 2019, among the Issuer; U.S. Bank National Association (rated AA (high) with a Stable trend by DBRS) as Collateral Agent, Custodian, Document Custodian, Collateral Administrator, Information Agent and Note Agent; and the Purchasers referred to therein.

The provisional rating on the Class A-1 Notes and new rating on the Class A-2 Notes address the timely payment of interest (excluding the additional interest payable at the Post-Default Rate, as defined in the NPSA referred to above) and the ultimate payment of principal on or before the Stated Maturity of August 30, 2029. The ratings on the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes address the ultimate payment of interest (excluding the additional interest payable at the Post-Default Rate, as defined in the NPSA referred to above) and the ultimate payment of principal on or before the Stated Maturity of August 30, 2029.

The provisional rating on the Combination Notes addresses the ultimate repayment of the Combination Note Rated Principal Balance (which is equal to the Commitment amount for the Combination Notes) on or before the Stated Maturity of August 30, 2029. The Combination Notes have no stated Coupon. The Components of the Combination Notes include portions of the Class A-2 Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes and Subordinated Notes (or equity) of the Issuer (for more information, see the Components and Combination Notes section in the related report).

All interest and principal amounts paid on the Secured Notes and any distributions made to the Subordinated Notes are the only sources of payment for the Combination Notes. All payments made on the Component Notes (whether interest, principal or otherwise) to the Combination Notes shall reduce the Combination Note Rated Principal Balance. The Combination Notes shall remain outstanding until the earlier of (a) the payment in full and redemption of each Component and (b) the Stated Maturity of each Component.

As of the Closing Date, DBRS’s ratings on the Class A-1 Notes and Combination Notes will be provisional. The provisional ratings reflect the fact that the effectiveness of the Class A-1 Notes and Combination Notes are subject to certain conditions after the Closing Date, such as a drawing order. It is expected that the Combination Notes will be funded in tandem with, and in proportion to, each Underlying Class but that the Class A-1 Notes and Combination Notes will not become effective until each of the Subordinated Notes and other Secured Notes are funded in reverse-sequential order. The finalization of the provisional ratings on the Class A-1 Notes and Combination Notes will be subject to satisfaction of certain conditions, as specified in the NPSA, including, but not limited to, the remaining unfunded commitments of the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes being reduced to zero. The provisional ratings on the Class A-1 Notes and Combination Notes may not be finalized if the other Secured Notes fail to be fully drawn.

The principal methodology used to rate the Secured Notes and Combination Notes is “Rating CLOs and CDOs of Large Corporate Credit,” which can be found on dbrs.com under Methodologies & Criteria. The Combination Notes were stressed by applying the BBB (low) stress scenario under the “Rating CLOs and CDOs of Large Corporate Credit” methodology to the loans securing the Component Notes.

The notes will be collateralized primarily by a portfolio of U.S. middle-market corporate loans. The Issuer will be managed by BlackRock Capital Investment Advisors, LLC (BCIA), which is a wholly owned subsidiary of BlackRock, Inc. DBRS considers BCIA to be an acceptable collateralized loan obligation (CLO) manager.

The ratings reflect the following:

(1) The NPSA dated as of August 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 under various cash flow stress scenarios; and
(5) DBRS’s assessment of the origination, servicing and CLO management capabilities of BCIA.

To assess portfolio credit quality, DBRS provides a credit estimate or internal assessment for each non-financial corporate obligor in the portfolio that is not rated by DBRS. Credit estimates are not ratings; rather, they represent a model-driven default probability for each obligor that is used in assigning a rating to a facility.

DBRS notes that the above press release was amended on August 21, 2020, to correct the initial rating date in the notes. The amendment was minor and would not impact the understanding of the reader.

Notes:
The principal methodology is Rating CLOs and CDOs of Large Corporate Credit, 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.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

This rating is endorsed by DBRS Ratings Limited for use in the European Union. The following additional regulatory disclosures apply to endorsed ratings:

This rating concerns a newly issued financial instrument. This is the first DBRS rating on this financial instrument.

For further information on DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml.

Lead Analyst: Joseph Priolo, Senior Vice President, U.S. Structured Credit
Rating Committee Chair: Jerry van Koolbergen, Managing Director, U.S. Structured Credit
Initial Rating Date: September 3, 2019

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at info@dbrs.com.

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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