Morningstar DBRS Assigns Provisional Credit Ratings to SESAC Finance, LLC Series 2025-1

DBRS, Inc. (Morningstar DBRS) assigned provisional credit ratings to the classes of notes to be issued by SESAC Finance, LLC Series 2025-1, as follows:

-- $40,000,000 Series 2025-1 Class A-1 Notes at (P) BBB (sf)*
-- $871,000,000 Series 2025-1 Class A-2 Notes at (P) BBB (sf)

*Class A-1 Notes will not be offered.

CREDIT RATING RATIONALE/DESCRIPTION

The provisional credit ratings are based on the following analytical considerations by Morningstar DBRS:

-- A long history of growth in financial performance, with revenue and profitability consistently growing since 2010.

-- Favorable tailwinds to support SESAC's continued growth in performance, driven largely by digital streaming and other related platforms.

-- A diverse and optimized affiliate base comprised of ~23,300 songwriters and publishers, across SESAC PRO, CCLI and Audio Network, with over 14,400 in the core SESAC PRO entity

-- Morningstar DBRS' operational risk review of SESAC Rights Management Inc. as the Manager.

-- SESAC's market position as the third-largest PRO in its space as well as its long operating history dating back to 1931.

-- The structural features of the transaction, such as the interest reserve account, the cash sweep mechanism, and the rapid amortization triggers which help pay down the notional balance of rated notes upon a business deterioration.

-- Legal analysis of the structure; separation of the assets from the operating company, nonconsolidation, and true-sale properties.

-- Cash flow analysis which shows a breakeven cash flow reduction threshold of 48.09% for the Class A-2 Notes. The cash flow result supports the (P) BBB (sf) provisional credit rating for the Series 2025-1 Class A-2 Notes.

-- The transaction assumptions consider Morningstar DBRS' baseline macroeconomic scenarios for rated sovereign economies, available in its commentary Baseline Macroeconomic Scenarios For Rated Sovereigns March 2025 Update, published on March 26, 2025. These baseline macroeconomic scenarios replace Morningstar DBRS' moderate and adverse COVID-19 pandemic scenarios, which were first published in April 2020.

Morningstar DBRS' credit ratings on the securities referenced herein address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations for the rated notes are the related Interest Amount and the related Principal Amount.

Morningstar DBRS' credit rating does not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. The associated contractual payment obligations that are not financial obligations for the rated notes are the interest on any unpaid Interest Amount, Post-ARD Contingent Interest, and Prepayment Amount (including Make-Whole Prepayment Premium).

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 (May 16, 2025) https://dbrs.morningstar.com/research/454196.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology applicable to the credit rating is Rating U.S. Structured Finance Transactions (Appendix XV: U.S Whole Business Securitizations) (March 10, 2025) https://dbrs.morningstar.com/research/449616.

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 the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings

A provisional credit rating is not a final credit rating with respect to the above-mentioned security and may change or be different than the final credit rating assigned or may be discontinued. The assignment of the final credit rating on the above-mentioned security is subject to receipt by Morningstar DBRS of all data and/or information and final documentation that Morningstar DBRS deems necessary to finalize the credit ratings.

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

DBRS, Inc.
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New York, NY 10005 USA
Tel. +1 212 806-3277

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 U.S. ABS Originators and Servicers (March 26, 2025), https://dbrs.morningstar.com/research/450709

Legal Criteria for U.S. Structured Finance (December 3, 2024),
https://dbrs.morningstar.com/research/444064

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