Fitch Affirms and Withdraws RP Select Finance Trust's IDR

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed and withdrawn RP Select Finance Trust's (RPSFT) 'BBB' Issuer Default Rating (IDR).

The Rating Outlook is Stable.

Fitch has withdrawn the rating, as the company has repaid its loan borrowings.

KEY RATING DRIVERS

The affirmation reflects the following:

Strong Margins/No Debt: RPSFT's royalty stream requires minimal operational expenses that generates EBITDA margins exceeding 99% annually. Fitch believes these high margins will remain durable during the life of the trust. Fitch expects RPSFT to remain debt-free following its pay-down of all loans outstanding in 2015.

High Operating Leverage: Fitch forecasts operating costs to remain low, resulting in sustained high EBITDA margin (above 99%). RPSFT's low operating expenses provides for significant EBITDA generation, resulting in EBITDA margins of 99% in 2016 and beyond. Operating costs are limited to management expenses, and trustee and financing fees. The company incurs no expenses for locating new revenue sources, as an investment event in August 2011 bars the company from sharing in any new assets from the beginning of 2012.

Cash Flow Supporting Distributions: Fitch projects sustained strong cash flow from operations from royalty revenues, the vast majority of which will flow to unit holders. Given the company's negligible capital/investment requirements, RSPFT should be able to finance distributions entirely with balance sheet cash.

KEY ASSUMPTIONS

Fitch's key assumptions within the rating case for RPSFT include:

--A declining royalty stream in 2016 through 2019, due to expiring assets;

--EBITDA margin maintained around 99%;

--Dividends at or above 95% of EBITDA;

--No future debt incurrence.

RATING SENSITIVITIES

Rating sensitivities are no longer relevant given today's rating withdrawal.

LIQUIDITY

Fitch expects the company to maintain adequate liquidity, given the strong cash generative nature of its business model. The company had approximately $95 million in cash and cash equivalents at March 31, 2016.

FULL LIST OF RATING ACTIONS

Fitch has affirmed and withdrawn the following rating:

RP Select Finance Trust

--IDR at 'BBB'.

The Rating Outlook is Stable.

Additional information is available on www.fitchratings.com

Summary of Financial Statement Adjustments - Financial statement adjustments that depart materially from those contained in the published financial statements of the relevant rated entity or obligor are disclosed below:

--No material adjustments have been made that have not been disclosed in the filings of this issuer.

Applicable Criteria

Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage (pub. 17 Aug 2015)

https://www.fitchratings.com/site/re/869362

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1011058

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1011058

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.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 MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160831006350/en/

Fitch Ratings
Primary Analyst
Bob Kirby, CFA
Director
+1-312-368-3147
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Megan Neuburger, CFA
Managing Director
+1-212-908-0501
or
Committee Chairperson
David Peterson
Senior Director
+1-312-368-3177
or
Media Relations:
Alyssa Castelli, +1 212-908-0540
[email protected]

Source: Fitch Ratings

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