Fitch has upgraded NewStar Financial's (NewStar) leveraged loan collateralized debt obligation (CDO) asset manager rating to 'CAM2' from 'CAM2-'. NewStar's 2006 CDO asset manager rating (CAM) rating was re-scaled to match 2007 criteria prior to Fitch's annual review and CAM rating update.
Key drivers of NewStar's rating include significant senior management experience, well established origination channels, and systematic underwriting supporting credit decisions. NewStar has built an institutional infrastructure that supports the rapid growth of NewStar's middle market CDO platform.
NewStar's 'CAM2' rating is based on the firm's composite score which takes into account qualitative adjustments made by the rating committee in addition to a weighted average based on the scores assigned for each group of criteria factors summarized below. This composite score is used to establish a systematically applied quantitative link between its asset manager rating and Fitch's CDO rating criteria, in accordance with the approach outlined in the Fitch report 'Reviewing and Rating CDO Asset managers' dated Jan. 2, 2007, available on the Derivative Fitch web site at www.derivativefitch.com.
--Company and Management Experience '3+' (Unchanged);
--Staffing '1-'(Unchanged);
--Procedures and Controls '2+' (Improved from '2');
--Portfolio Management '1-' (Unchanged);
--CDO Administration '1-' (Unchanged);
--Technology '2+' (Unchanged);
--CDO Portfolio Performance 'Not Scored'.
NewStar, headquartered in Boston, MA, was formed in June 2004 by a group of senior banking and capital markets executives from leading financial institutions, including FleetBoston Financial, Citigroup, and JP Morgan Chase, and by leading institutional investors, including Capital Z Partners, Corsair Capital Partners, and Och-Ziff Capital Management Group. NewStar is focused exclusively on providing customized financing solutions to midsized borrowers in three lending groups: middle market corporate; commercial real estate; and structured products. NewStar currently manages two middle market CLOs. NewStar Trust 2005-1, a $375 million CDO, closed August 2005 and NewStar Commercial Loan Trust 2006-1, a $500 million CDO, closed June 2006.
An updated profile report and full CAM rating report on NewStar will be available on the Derivative Fitch web site.
Fitch rates CDO asset managers by asset class, on a scale of 1 to 5, with 1 being the highest rating. The rating scale includes plus ('+') and minus ('-') designations, along with flat ratings. These ratings are based on a standardized scorecard methodology that includes factors in each of the seven groups as noted above.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.derivativefitch.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. Fitch means Fitch, Inc., Fitch Ratings, Ltd. and their subsidiaries including Derivative Fitch, Inc. and Derivative Fitch Ltd. and any successor or successors thereto.
