KBRA affirms Hildene TruPS 6 note ratings as liabilities decline

Traders Union
All News
Financial Institutions
KBRA affirms Hildene TruPS ratings

Highlights

KBRA affirmed ratings on seven note classes of Hildene TruPS Securitization 6, Ltd. as liabilities declined from $267.6 million to $234.6 million.
Liabilities decreased by $25.8 million year-over-year due to underlying asset prepayments, while the portfolio has no recognized defaults as of the latest date.
Weighted average life shortened from 10.1 to 8.8 years and K-PD (tenor-adjusted) dropped from 8.7% to 7.5%, with transaction maturity set for October 25, 2039.

Portfolio performance and rating action

As reported by Kroll Bond Rating Agency, the affirmation covers seven classes of notes issued by Hildene TruPS Securitization 6, Ltd., a cash flow collateralized debt obligation managed by Hildene Structured Advisors, LLC.

The transaction is backed by TruPS securities, surplus notes and subordinated debt issued by community and regional banks, insurance companies and their holding companies. It is a static deal and does not permit reinvestments.

At the initial rating, the performing portfolio consisted of 88 assets from 77 obligors with total collateral par value of $311.1 million and liabilities of $267.6 million. The portfolio now contains 69 assets with performing par value of $278.2 million and liabilities of $234.6 million, with no defaults recognized as of the latest portfolio date.

Credit metrics and maturity profile

Liabilities have fallen by $25.8 million since last year, a decline KBRA attributes to prepayments in the underlying assets. The transaction matures on October 25, 2039.

Since last year, the K-PD measure adjusted for asset tenor has changed from 8.7% to 7.5%, while weighted average life has moved from 10.1 years to 8.8 years. The current KWARF is 365, and KBRA first rated the transaction at closing on November 21, 2024.

KBRA said its ratings on the Class A-1, A-2F and A-2N notes address timely payment of interest and ultimate payment of principal by the stated maturity date. Its ratings on the Class B-1, B-2, C and D notes consider ultimate payment of both interest and principal by the applicable stated maturity date.

Sovereign borrowing risks in a higher-rate environment were previously in focus, with our publication noting that persistent geopolitical shocks and elevated fiscal spending can erode fiscal headroom and worsen refinancing strain. We also highlighted that emerging and frontier markets are especially exposed because debt-service burdens tend to be high relative to narrower revenue bases, while energy and food price pressures complicate inflation and credit outlooks.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.