KBRA Assigns a BBB- Rating to Seaspan's Sustainability Linked Six-Year Term Loan
Kroll Bond Rating Agency (KBRA) assigns a BBB- rating with a Stable Outlook to the Seaspan Holdco III Ltd. $200 Million Senior Secured Sustainability Linked Term Loan. The sustainability linked facility is a first for containership leasing and will become part of Seaspan's Vessel Portfolio Financing Program.
The rating is based on various key credit considerations primarily involving a guarantee from Seaspan Corporation; the strategic value of the collateral pool, strong structural features that provide flexibility for maintaining the quality of the collateral pool; and management's longstanding successful track record of actively managing its fleet.
KBRA's ratings incorporate all material credit factors including those that relate to Environmental, Social and Governance (ESG) factors. While ESG factors may influence ratings, it is important to underscore that KBRA's ratings do not incorporate value-based judgments. In rating transportation companies, KBRA evaluates material credit-relevant factors to assess an issuer or borrower's overall financial condition with respect to its ability to meet or refinance its debt obligations. Throughout our analysis, KBRA captures the impact of ESG factors in the same manner as all other credit-relevant factors. More information on ESG Consideations can be found here.
Seaspan is creating a first of its kind sustainability linked term loan that rewards or penalizes the Company based on carbon emissions. KBRA's analysis indicates that the pricing incentives do not materially impact the credit. Seaspan is aligning itself with the IMO 2050, Poseidon Principles, and the Clean Cargo Working Group on decarbonization which could improve access to investors and capital. Seaspan management, through the sustainability linked rate component, shows engagement and ESG thought leadership in the shipping industry.
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 U.S. Information Disclosure Form located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the U.S. Information Disclosure Form referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
KBRA is a full-service credit rating agency registered as an NRSRO with the U.S. Securities and Exchange Commission. 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 and is a certified Credit Rating Agency (CRA) with the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe is registered with ESMA as a CRA.
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