DB Master Finance LLC Series 2019-1 Notes Assigned Preliminary Ratings


  • DB Master Finance LLC's series 2019-1 issuance is backed by franchise royalty and license payments, securitization intellectual property, other licensing payments, franchisee lease payments, and certain fee-owned properties, among other things.
  • We assigned our preliminary ratings to the class A-1, A-2-I, A-2-II, and A-2-III notes.
  • The preliminary ratings reflect our view of the transaction's structure, projected cash flows, and strength of the Dunkin' Donuts and Baskin-Robbins brands, among other factors.
NEW YORK (S&P Global Ratings) March 13, 2019--S&P Global Ratings today 
assigned its preliminary ratings to DB Master Finance LLC's series 2019-1 
notes (see list).

The note issuance is backed by franchise royalty and license payments, 
securitization intellectual property, other licensing payments, franchisee 
lease payments, and certain fee-owned properties, among other things.

The preliminary ratings are based on information as of March 13, 2019. 
Subsequent information may result in the assignment of final ratings that 
differ from the preliminary ratings.

The preliminary ratings reflect our assessment of: 
  • Brand strength: The strength of the "Dunkin'" and "Baskin-Robbins" brands, the likelihood for the brands to survive through a DBI bankruptcy, and the brands' resulting capacities to continue generating sufficient cash flows from business operations, provided that adequate servicing remains in place.
  • Replaceable manager: The manager's responsibilities are generally limited to sales and general and administrative (SG&A) functions, which we believe increases the likelihood of successful replacement following a termination of the current manager. Additionally, the transaction has a back-up manager--FTI Consulting Inc. (established at the transaction's closing)--who has reviewed the business' cost structure relative to the sizing of the management fee, and believes it is adequate should they need to step in.
  • Legal isolation of the assets: Substantially all of the business' cash generating assets will no longer be owned by the manager at the transaction's closing. They have been sold through a "true sale" to the securitization issuer and guarantors, which are bankruptcy remote entities. This should decrease the likelihood that existing creditors of Dunkin' Brands could disrupt cash flow to the securitization following a manager bankruptcy. Legal opinions related to true sale and non-consolidation have been or will be provided before this transaction's closing.
  • Assets performance not fully correlated to manager performance: A system of franchised restaurants will likely continue to generate cash flow following the manager's bankruptcy, as individual franchisees generally operate independently from the manager (aside from SG&A functions, which we believe can be transferred to a back-up).
  • Cash flow coverage: Given the brand's strength, the replaceable nature of the manager, and the legal isolation of the assets from the manager, we have projected long-term cash flows for the business. Our analysis incorporates cash flow haircuts reflecting our view of how the business' assets could weaken in adverse economic conditions. Under these conditions, our analysis shows the cash flows generated by the business are sufficient to meet all debt service obligations of the rated notes.
  • Liquidity: A reserve account funded with three months of interest expenses and/or a letter of credit.
We work across the world

From London to San Francisco, to our home base in (Saint Helier) Jersey, we’re looking for extraordinary and creative scientists to help us drive the field forward.

AC Investment Inc. currently does not act as an equities executing broker or route orders containing equities securities. If AC Invest’s business model were to change and it begins routing non-directed orders in NMS securities, it will comply with the disclosure requirement of Rule 606.

77 Massachusetts Avenue Cambridge, MA 02139 617-253-1000 pr@ademcetinkaya.com