KBRA Assigns Preliminary Ratings to Sonic Capital LLC Series 2021-1 Senior Secured Notes

Kroll Bond Rating Agency (KBRA) assigns preliminary ratings to two classes of notes from Sonic Capital LLC Series 2021-1, a whole business securitization. KBRA also anticipates affirming the ratings on the Series 2020-1 A-1 and A-2 Notes.

This transaction is a whole business securitization (WBS) whereby Sonic LLC, a Delaware limited liability company formerly known as Sonic Corp. (“Sonic”, or the “Company”) and certain of its affiliates have contributed substantially all of their revenue-generating assets to Sonic Capital LLC (the “Master Issuer”) and the related securitization entities. The transaction is a master trust, and the Series 2021-1 Class A-2 Notes (the “Series 2021-1 Notes”) represent the Master Issuer’s sixth securitization within the trust, which was created in May 2011. The collateral includes existing and future domestic franchise and development agreements, existing and future company-operated restaurant royalties, domestic real estate assets and lease payments and intellectual property (“IP”). The proceeds from the Series 2021-1 Notes will be used to refinance the Master Issuer’s Series 2018-1 Class A-2 Notes (which are not rated by KBRA), pay certain transaction-related expenses and for general corporate purposes.

Sonic Industries LLC, a wholly owned subsidiary of the Master Issuer, is the franchisor and operator of restaurants under the Sonic brand. As of April 4, 2021, the Sonic restaurant system included 3,524 drive-in restaurants with annual system-wide sales of approximately $6.0 billion. The transaction includes royalty payments from 3,250 franchise locations and 274 company-operated restaurants, representing approximately 92% and 8% of total system-wide locations, respectively. All of the restaurant locations are located within the US across 46 states.

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Related Publications

• Whole Business Securitization (WBS) ABS Global Rating Methodology
• ESG Global Rating Methodology
• Global Structured Finance Counterparty Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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