Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to one class of notes issued by Hercules Capital Funding Trust 2019-1.

Hercules Capital Funding Trust 2019-1 (the “Issuer” or “Hercules 2019-1”) will issue the Series 2019-1 Fixed Rate Senior Notes (the “Notes”). The Notes expect to receive payments from an initial pool of first and second lien loans (and participations therein) made to life sciences companies (the “Life Sciences Loans”) and technology companies (the “Technology Loans” and, together with the Life Sciences Loans, the “Initial Loans”) and secured by certain assets of those companies.

The Initial Loans were originated or acquired by Hercules Capital, Inc. (the “Originator” or “Seller”) who will also act as servicer (the “Servicer”) for the transaction. This is the fourth term securitization of assets managed by Hercules Capital, Inc. (“Hercules” or the “Company”) and the third securitization rated by KBRA. KBRA notes that the Company will be retaining the equity in the transaction.

Hercules is a business development company (“BDC”) that specializes in providing senior secured loans to high-growth, venture capital-backed companies in technology, life sciences and sustainable and renewable technology industries at all stages of development. Hercules is an internally managed, non-diversified closed-end investment company that was founded in 2003 and began investment operations in 2004.

As of December 31, 2018, the composition of the initial loans (the “Initial Pool”) will consist of 41 loans to 34 obligors with an aggregate outstanding balance of approximately $357.2 million (the “Initial Pool Balance”). The exposures to Life Sciences Loans and Technology Loans will be approximately 60.0% and 40.0% of the Initial Pool Balance, respectively.

KBRA analyzed the transaction using KBRA’s Global General Rating Methodology for Asset-Backed Securities, published on November 28, 2017.

To access ratings, reports and disclosures, click here.

 

Rated Notes

Class

    

Initial
Notes Balance

    

Note Rate

    

Advance Rate

    

Legal Final
Payment Date

    

Preliminary
KBRA Rating

A     $250,000,000     Fixed Rate - TBD    

70%

    February 2028     A (sf)

Total

    

$250,000,000

                        

Related Publications: (available at www.kbra.com)

  • Hercules Capital Funding Trust 2019-1 Pre-Sale Report
  • Global General Rating Methodology for Asset-Backed Securities

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.