Drug Royalty III LP 1 (Series 2018-1) Assigned Ratings


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 assigned our ratings to the class A-1 and A-2 notes.
  • The ratings reflect our view of the transaction's legal and payment structures, overcollateralization, and DRI Capital Inc.'s servicing ability, among other factors.
SAN FRANCISCO (S&P Global Ratings) Dec. 7, 2018--S&P Global Ratings today 
assigned its ratings to Drug Royalty III LP 1's senior secured class A-1 
floating-rate and class A-2 fixed-rate notes series 2018-1 (see list).

The note issuance is an asset-backed securities transaction backed by royalty 
revenue from 15 royalty streams on 13 patent-protected drugs and technologies.

The ratings reflect:
  • 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 products approved by the U.S. Food and Drug Administration and European Medicines Agency.
  • The transaction's legal and payment structures.
  • DRI Capital Inc.'s servicing ability.
  • The currency hedge and interest rate cap with Wells Fargo Bank N.A.
  • The reserve account, which will have a target balance of the maximum of six months' interest payments or $1 million.
  • The overcollateralization, which provides credit support to the notes.
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