...Debtor In Possession Assets (DIPs) and Uptier Priming Debt May Be Acquired Outside of Investment Criteria: After the reinvestment period, the issuer may use principal proceeds to acquire a DIP collateral obligation or uptier priming debt in connection with the restructuring of a collateral obligation held by the issuer, subject to (i) the DIP obligation and uptier priming debt satisfying the collateral obligation definition, (ii) the collateral manager's reasonable belief of a better recovery and (iii) a 5% cumulative limit. This can occur outside the post- reinvestment period investment criteria and OC tests do not need to be satisfied. However, the concentration limitations and Fitch Collateral Quality Tests can be distorted without these mitigants. To account for this, Fitch tested the potential impact of the DIP assets on default cushions on a prior Fitch-rated transaction (Anchorage CLO 11 Ltd. (Reset)), and found it to be acceptable. Neutral Class A Loan Conversion: On any business...
