Morningstar DBRS Confirms AA (sf) Credit Ratings on Class A-R and Class A-T Loans of ABPCIC Funding IV, LLC

DBRS, Inc. (Morningstar DBRS) confirmed its following credit ratings on the Class A-R Loans and the Class A-T Loans (together, the Class A Loans) issued by ABPCIC Funding IV, LLC (the Borrower), pursuant to the Credit Agreement dated as of April 21, 2023, as amended by Amendment No. 1 to the Credit Agreement dated June 2, 2023, Amendment No. 2 to the Credit Agreement dated October 17, 2024, and Amendment No. 3 to the Credit Agreement dated April 21, 2025 (the Amendment), among ABPCIC Funding IV, LLC, as Borrower; Natixis, New York Branch, as Administrative Agent; U.S. Bank Trust Company, National Association, as Collateral Agent and Collateral Administrator; and the Lenders referred to therein:

-- Class A-R Loans at AA (sf)
-- Class A-T Loans at AA (sf)

The credit ratings on the Class A Loans address the timely payment of interest up to the Interest Rate Cap (as defined in the Credit Agreement) and the ultimate payment of principal on or before the Stated Maturity (as defined in the Credit Agreement).

CREDIT RATING RATIONALE/DESCRIPTION
The credit rating actions are a result of the Morningstar DBRS' review of the Amendment by applying the Global Methodology for Rating CLOs and Corporate CDOs (the CLO Methodology; November 19, 2024). The Amendment modified the definitions of Maximum Weighted Average Life Test, Reinvestment Period, and Maturity Date, among other changes. The Reinvestment Period end date is October 21, 2025. The Sated Maturity date is October 21, 2033.

The Borrower is a bankruptcy-remote special-purpose vehicle established by AB Private Credit Investors LLC (ABPCI) as the Collateral Manager. The Class A Loans are collateralized primarily by a portfolio of U.S. middle-market corporate loans and other corporate obligations. ABPCIC Funding IV is managed by ABPCI, an affiliate of Alliance Bernstein L.P. Morningstar DBRS considers ABPCI an acceptable collateralized loan obligation (CLO) manager.

In its analysis, Morningstar DBRS considered the following aspects of the transaction:
(1) The Credit Agreement dated as of April 21, 2023, as amended from time to time.
(2) The integrity of the transaction structure.
(3) Morningstar DBRS' assessment of the portfolio quality.
(4) Adequate credit enhancement to withstand projected collateral loss rates under various cash flow stress scenarios.
(5) Morningstar DBRS' assessment of the origination, servicing, and CLO management capabilities of ABPCI.
(6) The legal structure as well as legal opinions addressing certain matters of the Borrower and the consistency with the Morningstar DBRS "Legal Criteria for U.S. Structured Finance" methodology.
In its review, Morningstar DBRS applied the Level III surveillance approach, as described in the CLO Methodology, and incorporated the Trading Scenarios Approach, given that the transaction is within its reinvestment period.

The transaction has a dynamic structural configuration that permits variations of certain asset metrics via the selection of an applicable row from a collateral quality matrix (the CQM). Depending on a given Diversity Score, the following metrics will be selected accordingly from the applicable row of the CQM: Morningstar DBRS Risk Score, Weighted-Average Spread (WAS), and Weighted-Average Recovery Rate (WARR). Morningstar DBRS analyzed each structural configuration as a unique transaction and all configurations (rows) passed the applicable Morningstar DBRS rating stress levels. The Coverage Tests and triggers as well as the Collateral Quality Tests that Morningstar DBRS modeled during its analysis are presented below.

(1) Overcollateralization Ratio: Subject to Collateral Quality Matrix; threshold 141.54%; actual 157.82%
(2) Interest Coverage Ratio: threshold 150.00%; actual 233.49%
(3) Minimum Diversity Score Test: Subject to Collateral Quality Matrix; threshold 27; actual 36
(4) Maximum Morningstar DBRS Risk Score Test: Subject to Collateral Quality Matrix; threshold 34.00%; actual 32.65%
(5) Minimum WA Morningstar DBRS Recovery Rate Test: Subject to Collateral Quality Matrix; threshold 49.4%; actual 52.4%
(6) Minimum WA Coupon Test: threshold 7.50%; actual N/A
(7) Minimum WAS Test: Subject to CQM; threshold 5.25%; actual 5.37%

Some particular strengths of the transaction are (1) the collateral quality, which consists mostly of senior-secured middle-market loans; (2) the adequate diversification of the portfolio of collateral obligations (Diversity Score of 36 vs the threshold of 27); and (3) the Collateral Manager's expertise in CLOs and overall approach to selection of Collateral Obligations.

Some challenges were identified: (1) the expected WA credit quality of the underlying obligors may fall below investment grade, and the majority may not have public ratings, and (2) the underlying collateral portfolio may be insufficient to redeem the Class A Loans in an Event of Default.

As of March 13, 2025, the transaction is in compliance with all Coverage Tests and Collateral Quality Tests. The transaction is failing its Concentration Limitation for Second Largest Industry (16.4% vs maximum 15.0%), which was accounted for in Morningstar DBRS' analysis. There were no defaulted obligations reported to date.

Morningstar DBRS analyzed the transaction using the Morningstar DBRS CLO Insight Model and its proprietary cash flow engine, which incorporated assumptions regarding principal amortization, principal prepayment, amount of interest generated, principal prepayments, default timings, and recovery rates, among other credit considerations referenced in Morningstar DBRS' "Global Methodology for Rating CLOs and Corporate CDOs" (November 19, 2024). The model-based analysis produced satisfactory results, which, in addition to Morningstar DBRS' review of the Amendment, supported the credit rating confirmations on the Class A Loans.

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

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.

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 and the CLO Insight Model v1.0.1.4.

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.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to our Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of our website.

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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.

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 (December 3, 2024)
https://dbrs.morningstar.com/research/444064

Interest Rate Stresses for U.S. Structured Finance Transactions (March 27, 2025)
https://dbrs.morningstar.com/research/450750

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