TEXT-S&P rates Drug Royalty II LP 1 notes 'BBB (sf)'
OVERVIEW -- Drug Royalty II LP 1's issuance is a securitization backed by royalty revenue from 18 royalty streams on 11 patent-protected drugs and technologies. -- We assigned our 'BBB (sf)' ratings to both the class A-1 and A-2 notes. -- The 'BBB (sf)' ratings reflect our view of the transaction's timely interest and ultimate principal payments, the expected value of the collateral's cash flow, legal and payment structures, and DRI Capital Inc.'s servicing ability, among other factors. Dec 7 - Standard & Poor's Ratings Services today assigned its ratings to Drug Royalty II LP 1's $220 million fixed- and floating-rate senior secured notes series 2012-1 due Jan. 15, 2025 (see list). The note issuance is a securitization backed by royalty revenue from 18 royalty streams on 11 patent-protected drugs and technologies. The ratings reflect our view of: -- The likelihood that timely interest and ultimate principal payments will be made on or before the legal final maturity date. -- The drug marketers' and distributors' estimated credit quality. -- The expected value of the collateral's cash flow, which consists of royalty payments from U.S. Food and Drug Administration-approved drugs or patent-protected technologies. -- The transaction's legal and payment structures. -- DRI Capital Inc.'s servicing ability. -- The interest-rate cap with Wells Fargo Bank N.A. and the currency hedges with Morgan Stanley Capital Services and Wells Fargo Bank. -- The liquidity reserve account, which will have a target balance of the minimum of six months' interest payments or $1 million. -- The overcollateralization, which provides credit support to the notes. RELATED CRITERIA AND RESEARCH Related Criteria -- Principles Of Credit Ratings, Feb. 16, 2011 -- U.S. Corporate Securitization Transactions, Oct. 24, 2006 Related Research -- Presale: Drug Royalty II LP 1 - Series 2012-1, Nov. 28, 2012 -- Global Structured Finance Scenario And Sensitivity Analysis: The Effects Of The Top Five Macroeconomic Factors, Nov. 4, 2011 -- CIR (Cox-Ingersoll-Ross) Interest Rate Model, Nov. 3, 2010 -- Modeling Unhedged Foreign Exchange Risk In Structured Ratings, Nov. 20, 2000 RATINGS ASSIGNED Drug Royalty II LP 1 - Series 2012-1 Class Rating Amount A-1 BBB (sf) 88.0 A-2 BBB (sf) 132.0
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