KBRA releases research examining the role of anticipated repayment dates (ARD) in whole business (WBS) transaction structures. The report also reviews the upcoming ARD schedule across the KBRA-rated WBS population and provides an evaluation of potential refinancing challenges and issuer strategies.

Key Takeaways

• ARDs are a core feature of WBS transaction structures and mark the point at which issuers are generally expected to address repayment on outstanding notes, most commonly through refinancing.
• A meaningful volume of KBRA-rated WBS transactions (more than $7.9 billion in issuance, representing over 20% of the KBRA-rated WBS population) is approaching its ARD in the coming years, likely to drive a sustained period of refinancing activity alongside new issuance.
• Higher refinancing rates may place pressure on coverage metrics. KBRA-rated transactions with ARDs through 2027 may experience an average benchmark rate increase of approximately 2.3 percentage points relative to their original issuance levels. However, assuming constant credit spreads and operating cash flows, these issuers are expected to maintain DSCRs above 2.0x upon refinancing, with average coverage exceeding 2.5x.
• Refinancing outcomes will depend on both market conditions and transaction-level performance, which will likely influence the amount of excess cash flow available within the securitization. Despite the higher rate environment, KBRA expects the majority of WBS issuers to refinance their upcoming debt ahead of their ARDs.

Click here to view the report.

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About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

Doc ID: 1013467

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