JEFFERIES FINANCIAL GROUP INC.
Fitch Ratings has assigned a 'BBBsf' rating and Positive Rating Outlook to
The rating and Positive Rating Outlook reflects the rating and Outlook of
RATING ACTIONS
Entity / Debt
Rating
Floating Rate Notes, Series 2023-CL1 due
LT
BBBsf
New Rating
Page
of 1
VIEW ADDITIONAL RATING DETAILS
Transaction Summary
Monthly interest on the FRNs will be paid with funds the borrower receives from JFLLC under the MRA. JFLLC will also repurchase the assets at the value at which they were sold to the borrower, and the proceeds will be used by the borrower to make principal payments to the lender.
Jefferies has provided a full and unconditional guarantee of JFLLC's payment obligations to the trust under the repurchase agreement. The FRNs are secured by the repurchase agreement collateral and the rights under the repurchase agreement. The trust's payment obligations on the FRNs are not directly guaranteed by Jefferies.
KEY RATING DRIVERS
Credit Quality: Payment of the FRNs is supported by the guaranty from Jefferies in favor of the issuer. Jefferies, the sole risk-presenting entity, guarantees the obligations of JFLLC's obligations under the repurchase agreement. Jefferies's commitment under the guaranty ranks pari passu with all of its senior unsecured debt. This constitutes a pass-through rating of Jefferies's Long-Term Issuer Default Rating (IDR).
Number of Risk Contributors: There is one risk contributor to this transaction, Jefferies.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Direct Linkage to Risk-Presenting Entity: A change in Jefferies' Long-Term IDR will result in a corresponding change in the ratings assigned to the FRNs based on Fitch's Single- and Multi-Name Credit-Linked Notes Rating Criteria.
A downgrade of Jefferies' Long-Term IDR of one notch would result in a downgrade of the FRNs to 'BBB-sf';
A downgrade of Jefferies' Long-Term IDR of two notches would result in a downgrade of the FRNs to 'BB+sf'.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
An upgrade of Jefferies' Long-Term IDR of one notch would result in an upgrade of the FRNs to 'BBB+sf';
An upgrade of Jefferies' Long-Term IDR of two notches would result in an upgrade of the FRNs to 'A-sf'.
Best/Worst Case Rating Scenario
International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The rating of the FRNs is directly linked to the rating of
REPRESENTATIONS, WARRANTIES AND ENFORCEMENT MECHANISMS
A description of the transaction's representations, warranties and enforcement mechanisms (RW&Es) that are disclosed in the offering document and which relate to the underlying asset pool was not prepared for this transaction. Offering Documents for this market sector typically do not include RW&Es that are available to investors and that relate to the asset pool underlying the trust. Therefore, Fitch credit reports for this market sector will not typically include descriptions of RW&Es. For further information, please see Fitch's Special Report titled 'Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions'.
Additional information is available on www.fitchratings.com
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