OREANDA-NEWS. S&P Global Ratings today assigned its preliminary 'AAA (sf)' rating to the class A-2-R senior secured floating-rate replacement notes from Octagon Investment Partners XVII Ltd., a collateralized loan obligation (CLO) originally issued in 2013 that is managed by Octagon Credit Investors LLC. The replacement notes will be issued via a proposed supplemental indenture.

The preliminary rating reflects our opinion that the credit support available is commensurate with the associated rating level. The class A-2-R senior secured floating-rate replacement notes are expected to be issued at a lower spread over LIBOR than the original class A-2 notes, which currently have a spread of 1.90% over LIBOR.

On the Sept. 2, 2016, refinancing date, the proceeds from the issuance of the replacement notes are expected to redeem the original class A-2 notes. At that time, we anticipate withdrawing the rating on the original class A-2 notes and assigning a rating to the replacement notes. However, if the refinancing doesn't occur, we may affirm the rating on the original notes and withdraw our preliminary rating.

On a standalone basis, the results of the cash flow analysis indicated a lower rating on the class F notes than its current rating level. We believe that as the transaction enters its amortization period following the end of its reinvestment period, the transaction may begin to pay down the rated notes sequentially, starting with the class A notes, which, all else remaining equal, will begin to increase the overcollateralization levels. In addition, because the transaction currently has minimal exposure to 'CCC' rated collateral obligations and no exposure to long-dated assets (i. e., assets maturing after the CLO's stated maturity), we believe it is not currently exposed to large risks that would impair the current rating on the notes. In line with this, no change is anticipated to the rating at this time.