Thoma Bravo Credit and Asset Funding

Thoma Bravo Credit and Asset Funding is a critical aspect of the company's operations. Thoma Bravo has access to a significant amount of capital, having raised $17.5 billion in funds since its inception in 1993.

This capital allows Thoma Bravo to take a long-term approach to investing in software and technology companies. The company's patient investment strategy has led to significant returns in the past.

Thoma Bravo's asset funding model is designed to provide flexibility and support to its portfolio companies. The company has invested in over 300 companies, with a focus on software and technology.

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Thoma Bravo Credit has received credit ratings from KBRA, a leading credit rating agency. KBRA affirms the ratings on the Class A-1, Class A-2, Class B, and Class C Notes issued by Thoma Bravo Credit Asset Funding ABS, LLC.

The rated notes have received timely distributions of interest payments since the transaction closed in November 2023. This is a positive sign for investors, indicating that the credit is being managed effectively.

Thoma Bravo Credit Partners II, L.P. is the collateral manager responsible for the $500.0 million securitization, known as TBCAF 2023-1. The transaction is static with no reinvestment period, meaning that the credit is not being actively managed or expanded.

As of August 31, 2024, the portfolio comprises 32 obligors, with a pool balance of $457.0 million and a principal proceeds balance of $11.8 million. This brings the adjusted pool balance to $468.8 million.

The Class A, Class B, and Class C Notes have advance rates of 55.0%, 66.5%, and 76.5%, respectively. This means that these notes are secured by a smaller portion of the underlying assets.

KBRA determined a credit assessment for each asset in the initial portfolio, resulting in a weighted average assessment of approximately B-. The surveillance analysis used information from the trustee report as of August 2024 and the trustee payment reports through the July 2024 payment date.

The ratings on the Class A and Class B Notes consider timely payment of interest and ultimate payment of principal by the applicable stated maturity date. The rating on Class C considers ultimate payment of interest and ultimate payment of principal by the applicable stated maturity date.

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Thoma Bravo Credit has a significant presence in the asset funding securitization space, with a $456.3 million securitization managed by Thoma Bravo Credit Partners II, L.P. The securitization consists of five classes of notes, with the rated notes totaling $336.2 million.

The rated notes include Class A-1-R floating-rate notes, Class A-2-R fixed-rate notes, Class B-R fixed-rate notes, Class C-R fixed-rate notes, and Class D fixed-rate notes. The subordinated notes, which amount to $117.5 million, are expected to receive payments from a static portfolio of recurring revenue loans and middle market loans.

Thoma Bravo Credit Partners II, L.P. is a private equity, growth equity, and credit firm that invests primarily in the software and technology sectors. The firm has over 400 completed equity software transactions and over $160 billion in asset under management across its overall platform.

The Thoma Bravo credit platform has invested approximately $6.8 billion in over 75 portfolio companies since inception. The senior management team has extensive industry experience, which is a significant factor in their ability to manage and structure asset funding securitizations.

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Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to the notes based on the credit quality of the collateral and the structure of the transaction. The ratings on Class A-1-R, Class A-2-R, Class B-R, and Class C-R Notes consider timely payment of interest and ultimate payment of principal by the applicable stated maturity date.

The rating on Class D Notes considers ultimate payment of interest and ultimate payment of principal by the applicable stated maturity date. KBRA analyzed the transaction using the Structured Credit Global Rating Methodology, the Global Structured Finance Counterparty Methodology, and the ESG Global Rating Methodology.

The deal has several trigger events, including a rapid amortization event that will pay down the class A, B, and C notes fully and in sequential order if an applicable event occurs. This credit enhancement feature is designed to reduce the risk of the notes and increase their credit quality.

The securitization is backed by a diversified portfolio of recurring revenue loans and middle market loans, with the top five obligors accounting for 30.6% of the pool. This concentration is slightly higher than the 22.2% to 22.9% range seen in previous peer transactions from different issuance programs.

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