Cedar Crest 2026-2 note ratings assigned for $815 million CLO

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Cedar Crest 2026-2 CLO note ratings

Highlights

Cedar Crest 2026-2 LLC issued five classes of notes totaling $815 million, backed by an $811.0 million corporate loan portfolio serviced by Eldridge Structured Credit Advisers, LLC.
Kroll Bond Rating Agency assigned ratings reflecting the transaction's initial credit enhancement levels, excess spread, and coverage tests, with Class A and B notes assessed for timely interest and principal payments.
The portfolio comprises 152 obligors with a K-WARF of 3400 (B- weighted average), and features a high expected allocation to Variable Funding Collateral Obligations.

Transaction structure and rating scope

As reported by KBRA, citing Kroll Bond Rating Agency, Cedar Crest 2026-2 LLC issues five classes of notes in a transaction serviced by Eldridge Structured Credit Advisers, LLC. The notes are backed by an $811.0 million portfolio of corporate loans, with a substantial portion expected to consist of Variable Funding Collateral Obligations, or VFCOs.

The notes are revolving and may be drawn and repaid on a pro rata basis to acquire additional collateral obligations or fund commitments tied to existing revolving collateral. After the reinvestment period ends, principal proceeds from sales, maturities, or permanent paydowns of collateral obligations are applied sequentially to repay the rated notes.

KBRA says the ratings reflect initial credit enhancement levels, excess spread, and coverage tests, including overcollateralization and interest coverage ratios. Its ratings on the Class A and B notes consider timely payment of interest and ultimate payment of principal by the stated maturity date, while the Class C, D, and E ratings consider ultimate payment of interest and principal by maturity.

Portfolio composition and credit profile

The current portfolio has exposure to 152 obligors, giving the CLO diversification across a broad group of borrowers. KBRA says the obligors carry a K-WARF of 3400, representing a weighted average portfolio credit assessment of about B-.

The rating action underscores continuing issuance activity in structured credit markets tied to senior secured corporate loans. For investors, the transaction's revolving features, expected VFCO exposure, and portfolio credit quality remain central factors in assessing repayment protections and risk across the capital structure.

In our earlier coverage of KBRA’s review of Stone Point Credit MM CLO 2025-2, we noted that the agency affirmed ratings on four loan classes for the $425 million middle-market CLO. The update highlighted that the portfolio had no defaulted assets as of the July 2026 trustee report and pointed to a K-WARF of 2979 (around B/B-) as a key indicator of underlying credit quality and repayment expectations through stated maturities.

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