KBRA Assigns Preliminary Ratings to Concord Music Royalties, LLC, Series 2022-1
KBRA assigns preliminary ratings to Concord Music Royalties, LLC, Series 2022-1, Class A-1 VFN and Class A-2, issued by Concord Music Royalties, LLC a music royalty ABS transaction.
Concord Music Royalties, LLC (the Issuer) represents Concord's first music royalty securitization. The transaction will be collateralized by royalties from a music catalog (the Catalog) of content from over 1 million assets from top artists and songwriters, including R.E.M, Creed, Genesis, Phil Collins, Mike + The Mechanics, and Evanescence, which are among the largest in the Catalog by net publisher share and net label share. Royalty payments include both publishing rights and sound recording rights. An independent third-party valuation firm (Valuation Agent) determined a valuation of $4.1 billion for the Catalog using a discounted cash flow method.
Proceeds from the Transaction are expected to be used to fund the reserve accounts, pay certain transaction expenses, repay existing indebtedness, and for other general corporate purposes. The Notes pay interest on a quarterly basis and are not scheduled to pay down principal prior to the anticipated repayment date (ARD) in January 2026 for the Class A-1 VFN (assuming that the two one-year extension options are not exercised) and January 2028 for the Class A-2 notes. Prior to the ARD, the only required principal payments are to maintain compliance with the borrowing base requirement which is a function of the note advance rate and the collateral value derived from the present value of the Valuation Agent's annually updated valuation.
Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. 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. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.
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