OREANDA-NEWS. S&P Global Ratings today raised its ratings on the class B and C notes and affirmed its ratings on the class A, D, and E notes from Galaxy XV CLO Ltd., a U. S. collateralized loan obligation (CLO) managed by PineBridge Investments LLC (see list).

Today's rating actions follow our review of the transaction's performance, using data from the July 5, 2016, trustee report. The transaction is scheduled to remain in its reinvestment period until April, 2017.

The upgrades primarily reflect credit quality improvement in the underlying collateral and some increase in credit support since our effective date rating affirmations in January 2014.

Collateral with an S&P Global Ratings' credit rating of 'BB-' or higher has increased significantly from the August 2013 effective date report used for our previous review. In addition, the number of unique obligors referenced in the portfolio has increased to 354 from 240 as of the effective date report. This has reduced the portfolio's concentration risk.

The transaction has also benefited from collateral seasoning, with the reported weighted average life decreasing to 4.52 years from 5.59 years since the effective date. This seasoning, combined with the improved credit quality, has decreased the overall credit risk profile, which, in turn, provided more cushion to the tranche ratings.

The transaction has experienced an increase in both defaults and assets rated 'CCC+' and below since the August 2013 effective date report. Specifically, the amount of defaulted assets increased to $0.50 million from one asset as of the July 2016 trustee report from zero as of the effective date report. The amount of assets rated 'CCC+' and below increased to $31.48 million (5.43% of the aggregate principal balance) from $3.30 million over the same period. Overall, the increase in defaulted assets and assets rated 'CCC+' and below has been offset by the decline in the weighted average life and positive portfolio credit migration of the collateral portfolio.

Additionally, par gain in the underlying portfolio since the effective date has led to a small increase in the overcollateralization (O/C) according to the July 2016 trustee report:The senior O/C ratio was 137.81%, up from 137.61%The class C O/C ratio was 123.00%, up from 122.82% The class D O/C ratio was 115.26%, up from 115.09%The class E O/C ratio was 109.62%, up from 109.46%The reinvestment O/C ratio was 109.62, up from 109.46%The affirmations reflect our belief that the credit support available is commensurate with the current rating lev

Although our cash flow analysis indicated higher ratings for the class B, C, D, and E notes, our rating actions consider additional sensitivity runs that considered the exposure to specific distressed industries and allowed for volatility in the underlying portfolio given that the transaction is still in its reinvestment period.

Our review of this transaction included a cash flow analysis, based on the portfolio and transaction as reflected in the aforementioned trustee report, to estimate future performance. In line with our criteria, our cash flow scenarios applied forward-looking assumptions on the expected timing and pattern of defaults and recoveries upon default under various interest rate and macroeconomic scenarios. In addition, our analysis considered the transaction's ability to pay timely interest and/or ultimate principal to each of the rated tranches. The results of the cash flow analysis demonstrated, in our view, that all of the rated outstanding classes have adequate credit enhancement available at the rating levels associated with this rating action.

S&P Global Ratings will continue to review whether, in its view, the ratings assigned to the notes remain consistent with the credit enhancement available to support them and take rating actions as it deems necessary.