Morningstar DBRS Discontinues Credit Ratings, Reassigns Provisional Credit Ratings on the Funded Class B-1 Loans, Funded Class B-2 Loans, and Funded Class C Loans of NPC Funding IX, Ltd.

DBRS, Inc. (Morningstar DBRS) withdrew its final credit ratings on the Funded Class B-1 Loans, the Funded Class B-2 Loans, and the Funded Class C Loans (together, the Loans) issued by NPC Funding IX Ltd and then assigned provisional credit ratings to the Loans as follows:

-- Funded Class B-1 Loans at (P) BBB (low) (sf)
-- Funded Class B-2 Loans at (P) BB (low) (sf)
-- Funded Class C Loans at (P) BB (low) (sf)

The Loans were issued pursuant to the Revolving Loan Agreement dated as of July 30, 2021, as amended pursuant to the First Amendment to the Revolving Loan Agreement, dated as of September 30, 2021; the Second Amendment to the Revolving Loan Agreement, dated as of March 18, 2022; and the Third Amendment to the Revolving Loan Agreement, dated as of August 17, 2023, by and among NPC Funding IX Ltd. as Borrower; First Eagle Alternative Credit, LLC (First Eagle) as Collateral Manager; U.S. Bank, N.A. as Collateral Custodian; Royal Bank of Canada as Administrative Agent and Revolving Lender; the Lenders and the collateralized loan obligation (CLO) Subsidiary from time to time thereto.

The credit ratings on the Loans address the ultimate payment of interest (excluding the Subordinated Loan Interest Amount as defined in the Revolving Loan Agreement) and the ultimate payment of principal on or before the Facility Maturity Date (as defined in the Revolving Loan Agreement). For the avoidance of doubt, the ratings do not address the repayment of the Cure Amounts (as defined in the Revolving Loan Agreement).

CREDIT RATING RATIONALE/DESCRIPTION
The credit rating actions are the result of Morningstar DBRS' annual review of the transaction by applying the "Global Methodology for Rating CLOs and Corporate CDOs" (the CLO Methodology; February 23, 2024; https://www.dbrsmorningstar.com/research/428544). The Aggregation Period end date is June 17, 2024. The Stated Maturity Date is December 25, 2031.

The rated Loans were paid down to zero via a CLO takeout. Currently, this transaction has no assets and no funded balance on the Loans. However, the transaction may be refunded and purchase new assets. As a result, the final credit ratings were discontinued, and provisional credit ratings of the same level were assigned, as the transaction does not meet the criteria to maintain final credit ratings per the CLO Methodology.

The Loans are collateralized primarily by a portfolio of U.S. broadly syndicated corporate loans. First Eagle is the Collateral Manager for this transaction. Morningstar DBRS considers First Eagle to be an acceptable CLO collateral manager.

In its analysis, Morningstar DBRS considered the following aspects of the transaction:

-- The Revolving Loan Agreement, as amended by the Amendment.
-- The integrity of the transaction structure.
-- Morningstar DBRS' assessment of the portfolio quality.
-- Adequate credit enhancement to withstand Morningstar DBRS' projected collateral loss rates under various cash flow-stress scenarios.
-- Morningstar DBRS' assessment of the origination, servicing, and CLO management capabilities of First Eagle.

Some particular strengths of the transaction include: (1) the par subordination at each point in the Collateral Quality Matrix is sufficient to withstand the respective rating analysis; (2) the portfolio is to be predominately invested in senior secured loans; and (3) the Borrower is a bankruptcy-remote entity and is limited in its permitted activities. Some challenges identified include: (1) the expected weighted-average (WA) credit quality of the underlying obligors may fall below investment grade (per the Collateral Quality Matrix); and (2) the underlying collateral portfolio may be insufficient to redeem the Loans in an event of default.

Morningstar DBRS' credit ratings on the applicable classes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. Where applicable, a description of these financial obligations can be found in the transaction's respective press releases at issuance.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The Morningstar DBRS short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) https://dbrs.morningstar.com/research/437781.

Notes:
All figures are in US dollars unless otherwise noted.

The principal methodology applicable to the credit ratings is the Global Methodology for Rating CLOs and Corporate CDOs (November 19, 2024) https://dbrs.morningstar.com/research/443207.

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

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

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

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

This is a solicited credit rating.

DBRS, Inc.
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The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

Interest Rate Stresses for U.S. Structured Finance Transactions (February 26, 2024)
https://dbrs.morningstar.com/research/428623

Operational Risk Assessment for Collateralized Loan Obligations (CLOs) and Corporate Collateralized Debt Obligations (CDOs)
(August 23, 2024) https://dbrs.morningstar.com/research/438315

Legal Criteria for U.S. Structured Finance (October 28, 2024) https://dbrs.morningstar.com/research/441840

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