DBRS Morningstar Takes Rating Actions on Vine 2020-1

DBRS, Inc. (DBRS Morningstar) took the following rating actions on the Vine 2020-1 transaction:

-- Class A Notes, confirmed at A (sf)
-- Class B Notes, upgraded to A (low) (sf) from BBB (sf)
-- Class C Notes, upgraded to BBB (high) (sf) from BB (sf)

The rating actions are based on the following analytical considerations:

-- 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 Coronavirus Disease (COVID-19) pandemic scenarios, which were first published in April 2020.

-- Since the transaction’s close, the film library has generated more cashflow than projected at closing, resulting in incremental note amortization.

-- The structure accommodates the concept of updated valuations upon the occurrence of certain events. FTI Consulting, Inc. provided an updated valuation that encompassed updated valuation drivers. Given that this updated forecast reflects more recent trends, DBRS Morningstar incorporated this valuation in its cash flow modeling scenarios. Furthermore, the initial Film Library valuation window began on June 30, 2020, and was to run through to and include June 30, 2035, with a terminal value on that date. The updated Film Library valuation window began on December 31, 2022, and runs through to and includes November 30, 2050, without a terminal value. The updated valuation drivers, result in a higher asset valuation than at closing.

-- Transaction capital structure, current rating, and form and sufficiency of available credit enhancement.

-- The ability of the transaction to withstand stressed cash flow assumptions and the Class A Notes repay timely interest on a quarterly basis while the Class B and C Notes repay ultimate interest on a quarterly basis and each class of notes repays ultimate principal by the final maturity date.

-- The credit quality of the collateral pool and historical performance as of December 2022, in addition to DBRS Morningstar's assessment of future performance.

-- The transaction parties’ capabilities in the film rights exploitation space.

-- The operational history of Village Roadshow Entertainment Group USA Inc. (VREG) and the strength of the overall company and its management team.

-- The assets supporting this transaction are a combination of the existing film library from VREG and the Virtual film library. The transaction benefits from perpetual revenue generated from the exploitation of the titles across various media platforms and merchandising.

-- Because this is a film library transaction, there is no production risk in the portfolios. All films have been released and are through their theatrical windows.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors 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 (May 17, 2022).

Notes:
The principal methodology applicable to the ratings is DBRS Morningstar Master U.S. ABS Surveillance (February 6, 2023; https://www.dbrsmorningstar.com/research/409444).

Other methodologies referenced in this transaction are listed at the end of this press release.

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.

The rating was initiated at the request of the rated entity.

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

DBRS Morningstar had access to the accounts, management and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This is a solicited credit rating.

DBRS, Inc.
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Tel. +1 212 806-3277

The rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

Operational Risk Assessment for U.S. ABS Servicers (April 5, 2023)
https://www.dbrsmorningstar.com/research/412303

Operational Risk Assessment for U.S. ABS Originators (April 5, 2023)
https://www.dbrsmorningstar.com/research/412302

Legal Criteria for U.S. Structured Finance (December 7, 2022)
https://www.dbrsmorningstar.com/research/407008

Rating U.S. Structured Finance Transactions (February 6, 2023)
https://www.dbrsmorningstar.com/research/409449

Rating Film Rights Securitizations (April 8, 2022)
https://www.dbrsmorningstar.com/research/395049

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