Drug Royalty III LP 1 Series 2016-1 And 2017-1 Ratings Affirmed

OVERVIEW
  • Drug Royalty III LP 1's issuance is an ABS transaction backed by royalty revenue from 15 royalty streams on 13 patent-protected drugs and technologies.
  • We affirmed our 'BBB (sf)' ratings on the series 2016-1 and 2017-1 class A notes.
  • The affirmations reflect our view of the transactions' ability to pass the current rating level stresses given the new series 2018-1 issuance out of the same master trust.
SAN FRANCISCO (S&P Global Ratings) Dec. 7, 2018--S&P Global Ratings today 
affirmed its 'BBB (sf)' ratings on Drug Royalty III LP 1's class A notes from 
series 2016-1 and the class A-1 and class A-2 notes from series 2017-1 (see 
list).

The series 2016-1, 2017-1, and 2018-1 notes are asset-backed securities (ABS) 
issued out of the same master trust, Drug Royalty III LP 1. At the time of the 
series 2016-1 issuance, the trust's collateral consisted of royalty revenue 
from eight royalty streams on seven patent-protected drugs and technologies. 
At the time of the series 2017-1 issuance, the trust's collateral had 12 
royalty streams on 11 patent-protected drugs and technologies. The issuer has 
added more collateral to the trust in order to support the series 2018-1 
issuance. The series are now backed by royalty revenue from 15 royalty streams 
on 13 patent-protected drugs and technologies. The current outstanding balance 
of the series 2016-1 class A notes is $59.716 million and that of the series 
2017-1 classes A-1 and A-2 notes were $50.59 million each as of Dec. 7, 2018, 
the closing date of the new issuance.

Since the additional series 2018-1 was recently issued out of the trust, we 
reviewed the existing outstanding securitizations to ensure the series 2016-1 
notes and the series 2017-1 notes would continue to pass at the current rating 
level. The affirmations reflect our view of the transactions' ability to pass 
the current rating level stresses given the new series 2018-1 issuance.

We will continue to review whether, in our view, the ratings currently 
assigned to the notes remain consistent with the credit enhancement available 
to support them, and we will take rating actions as we deem necessary.