Morningstar DBRS Finalizes Provisional Credit Ratings on Global SC Finance X Limited

DBRS, Inc. (Morningstar DBRS) finalized its provisional credit ratings on the following classes of Fixed Rate Deferrable Interest Structured Notes, Series 2025-1H (the Offered Notes) issued by Global SC Finance X Limited (the Issuer):

-- $460,000,000 Class A Notes at BBB (sf)
-- $40,000,000 Class B Notes at BB (sf)

CREDIT RATING RATIONALE/DESCRIPTION

The credit ratings on the Offered Notes are based on Morningstar DBRS' review of the following considerations:

(1) The Offered Notes are collateralized primarily by the residual cashflows from seven marine container ABS transactions (Underlying Transactions) with Global SC Finance SRL (GSCF), Global SC Finance V SRL (GSCF V), Global SC Finance VII SRL (GSCF VII), and CRX Intermodal Bermuda Ltd. (CIB) as the respective issuers and/or borrowers. Each of the Underlying Transactions are secured by a specified collateral pool; however, the four series of Underlying Transactions issued by GSCF VII can share funds to cover deficiencies at the bottom of the respective priority of payments for each series.

(2) The cash flow scenarios run by Morningstar DBRS for the Offered Notes incorporate the (a) asset cash flows for each Underlying Transaction after application of the utilization, per diem rate, residual realization, and operating expense stresses commensurate with a BBB (sf) rating and a BB (sf) rating for each of the Class A and Class B Notes, respectively; (b) the priority of payments and salient structural provisions for each Underlying Transaction, including the effect from (in the case of each series, as applicable) (i) items in the priority of payments for the Underlying Transaction which are subordinated to interest and principal payments on the Offered Notes, subject to the Subordination Agreement, (ii) Early Amortization Events, (iii) Anticipated Refinance Date (ARD), Scheduled Termination Date, and/or Scheduled Commitment Expiration Date (as applicable), (iv) available interest rate hedges, as applicable, and (v) Advance Rates; (c) interest, fees, scheduled and supplemental principal payments, and other expenses due in connection with each series of the Underlying Notes; and (d) the priority of payments and salient structural features outlined in the Indenture for the Offered Notes.
-- The cash flow scenarios assume the start of the first recessionary environment at the onset of this transaction.
-- In its cash flow scenarios, Morningstar DBRS only assigned limited credit to potential residual cash flows from one warehouse facility (CIB), mostly for the duration of the revolving period. Both warehouse Asset Owning Entities will be limited in their ability to remove and/or transfer collateral from the warehouse, subject to certain conditions and allowances.
-- Morningstar DBRS views the restrictions on the removal of assets from the warehouse facilities, despite the intended use of proceeds to substantially pay down GSCF's outstanding liabilities, in addition to the limited credit assigned to the residual cash flows from both warehouses, as a strong positive qualitative factor for the Offered Notes in the near term.

(3) The transaction's capital structure and the form and sufficiency of available credit enhancement.
-- Subordination (in the case of the Class A Notes), overcollateralization (OC), and the Restricted Cash Account, which covers six months of interest on the Offered Notes, create credit enhancement levels and liquidity that are commensurate with the ratings.
-- The cash flow scenarios run by Morningstar DBRS confirmed the sufficiency of credit enhancement and other structural provisions to facilitate ultimate payment of interest (other than Additional Interest and Default Interest) and ultimate repayment of principal of the Offered Notes by the Legal Final Maturity Date from the cash flows generated in the Underlying Transactions and from related assets in a stressed environment commensurate with a BBB (sf) and a BB (sf) credit rating for the Class A and Class B Notes, respectively.

(4) Notable characteristics of the collateral in the Underlying Transactions include the following:
-- The collateral includes the most representative types of marine containers, with 46.2% of Net Book Value (NBV) of the underlying containers being standard dry freight containers. In addition, 93.0% of the collateral by NBV is subject to either long-term leases or finance leases, thus, locking in per diem rates on and ensuring utilization of the collateral for longer periods of time.
-- As is typical for the industry, the obligor mix is relatively concentrated, with the five largest lessees accounting for approximately 46.6% of the collateral pool (by NBV). The lessees primarily represent some of the leading container shipping liners. Container shipping liners' recent financial performance has been relatively strong, with record high profits achieved as recently as in 2021, and another year of steady financial performance expected for 2025. While such outstanding performance may not be sustainable in the long term, it bodes well for the near- to medium-term credit performance outlook for container lessors.

(5) Structural features of the transaction trigger an accelerated principal amortization of the Offered Notes if the EBIT Ratio is less than 1.10 to 1.00 or if credit enhancement deteriorates (Asset Base Deficiency). The Transaction also incorporates gradual scheduled deleveraging of the Offered Notes, with principal amortization switching to "full turbo" after the ARD in September 2029.

(6) Seaco SRL's capabilities with regard to managing the fleet of marine containers. Seaco SRL is an experienced manager of marine container lease collateral, having started operations in 1965.
-- Morningstar DBRS has performed an operational review of Seaco SRL and considers the entity to be an acceptable manager of the marine container leasing fleet as well as servicer for the Transaction.

(7) 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.

(8) The legal structure and legal opinions that are expected to address enforceability, nonconsolidation, and security interest perfection issues, and the consistency with the DBRS Morningstar Legal Criteria for U.S. Structured Finance.

Morningstar DBRS' credit ratings on the Offered Notes address the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the associated Note Interest Payment, Aggregate Note Principal Balance, and interest on unpaid interest.

Morningstar DBRS' credit ratings do not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction documents that are not financial obligations. The associated contractual payment obligations that are not financial obligations are related Indemnities by the servicer to the noteholders, Additional Interest, and Default Interest.

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 ratings is Rating Marine Container Securitizations (August 6, 2024) https://dbrs.morningstar.com/research/437539.

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

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
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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.

A description of how Morningstar DBRS analyses structured finance transactions and how the methodologies are collectively applied can be found at: https://dbrs.morningstar.com/research/417279.

Rating U.S. Structured Finance Transactions (March 10, 2025)
https://dbrs.morningstar.com/research/449616

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

Interest Rate and Currency Stresses for Global Structured Finance Transactions (September 3, 2025)
https://dbrs.morningstar.com/research/461958

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