DBRS Morningstar Upgrades Ratings of Humboldt Americas, LLC to AA (sf); Removes Ratings of Series 2, 5, 6, 7, and 8 Notes from UR-Pos; Discontinues Rating on Series 5 Notes and Prov Rating on Series 9

DBRS, Inc. (DBRS Morningstar) upgraded the ratings on the Series 2, Series 6, Series 7, and Series 8 Notes issued by Humboldt Americas, LLC to AA (sf) from A (sf); removed the ratings on the Series 2, Series 5, Series 6, Series 7, and Series 8 Notes from Under Review with Positive Implications; and discontinued the rating on the Series 5 Notes due to repayment. Additionally, DBRS Morningstar discontinued its AA (sf) provisional rating on the Series 9 Notes due to the expectation that the provisional ratings would not be finalized.

DBRS, Inc. (DBRS Morningstar) upgraded ratings on four series of notes Under Review with Positive Implications as follows:
-- Humboldt Americas LLC, Series 2 Notes at AA (sf)
-- Humboldt Americas LLC, Series 6 Notes at AA (sf)
-- Humboldt Americas LLC, Series 7 Notes at AA (sf)
-- Humboldt Americas LLC, Series 8 Notes at AA (sf)

-- The rating actions above are being provided in relation to the notice related to a change in the insurance policy received as of January 6, 2023 between Humboldt Americas LLC, a Delaware limited liability company (“Issuer”) and The Bank of New York Mellon, as Trustee and Paying Agent.

DBRS, Inc. (DBRS Morningstar) discontinued the rating of one series of notes due to repayment
-- Humboldt Americas LLC, Series 5 Notes

DBRS Morningstar also removed these five ratings from Under Review with Positive Implications, where they were first placed on March 15, 2022.

DBRS, Inc. (DBRS Morningstar) discontinued a provisional rating on one series of notes due to the expectation that the provisional ratings would not be finalized:
-- Humboldt Americas LLC, Series 9 Notes at AA (sf)

RATING RATIONALE/DESCRIPTION
The ratings are based on DBRS Morningstar’s review of the following analytical considerations:

-- On April 4, 2022, DBRS Morningstar finalized its “Rating U.S. Structured Finance Transactions” methodology after the closure of a request for comment period on the updates to Appendix V: Obligations Backed by Insurance Policy (Financial Guarantee). This appendix to the methodology presents the criteria for which obligations backed by insurance policy (financial guarantee) in North America are assigned and/or monitored. In this update, DBRS Morningstar retains the ability to flow through, on a one-to-one basis, an entity’s DBRS Morningstar credit rating in the assignment and monitoring of a structured finance security and removed the use of an internal assessment.

-- The transaction assumptions consider DBRS Morningstar’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary Baseline Macroeconomic Scenarios For Rated Sovereigns - December 2022 Update, published on December 21, 2022. These baseline macroeconomic scenarios replace DBRS Morningstar’s moderate and adverse COVID-19 pandemic scenarios, which were first published in April 2020.

-- The transaction was amended so that ACE American Insurance Company is now the sole insurer within this transaction

-- The rationale for the rating upgrade is to align the rating on the notes with the DBRS Morningstar financial strength rating of ACE American Insurance Company

-- The satisfactory insurance policy coverage of the principal of the Notes.

-- DBRS Morningstar’s opinion on the creditworthiness of ACE American Insurance Company as addressed in the related DBRS Morningstar financial strength rating. Changes to the DBRS Morningstar’s financial strength rating on ACE American Insurance Company will flow-through to the ratings on The Notes.

-- The full and timely payment of the Notes from the insurance proceeds upon worst-case default scenarios of the underlying receivables.

-- Structural protections that enforce a controlled wind-down upon certain occurrences.

-- DBRS Morningstar’s operational review with regard to originations, underwriting, and servicing, which concluded that the entity is an acceptable originator and servicer of trade receivables and includes an acceptable backup servicer.

-- The legal structure and its consistency with DBRS Morningstar’s “Legal Criteria for U.S. Structured Finance.”

-- DBRS Morningstar is rating to the Legal Final Maturity Date. The rating is based on the timely payment of interest and ultimate payment of principal.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
General Considerations

There were no Environmental/ Social/ Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings.

Notes:
The principal methodology is Rating U.S. Structured Finance Transactions – Appendix V: Obligations Backed by Insurance Policy (Financial Guarantee) (February 6, 2023), which be found at: https://www.dbrsmorningstar.com/research/409449/rating-us-structured-finance-transactions.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482/baseline-macroeconomic-scenarios-application-to-credit-ratings.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar 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.

The full report providing additional analytical detail is available by clicking on the link under Related Documents below or by contacting us at [email protected].

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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