OREANDA-NEWS. S&P Global Ratings today raised its ratings on the class A-2a, A-2b, and B notes and affirmed its ratings on the class A-1, C, D, and E notes from Voya CLO 2013-2 Ltd., a U. S. collateralized loan obligation (CLO) transaction that closed in 2013 and is managed by Voya Alternative Asset Management LLC (see list).

Today's rating actions follow our review of the transaction's performance, using data from the July 14, 2016, trustee report. The transaction is scheduled to remain in its reinvestment period until April 2017.

The upgrades primarily reflect credit quality improvement in the underlying collateral since our November 2013 rating affirmations following the transaction's effective date. The underlying collateral of the portfolio with an S&P Global Ratings' credit rating of 'BB-' or higher has increased significantly since the July 2013 effective date report, which we used for our previous rating actions. The purchasing of this higher-rated collateral by the collateral manager has caused the portfolio's weighted average rating to rise to 'B+' from 'B'.

The transaction has also benefited from portfolio seasoning, with the reported weighted average life decreasing to 4.72 years in July 2016 from 5.42 years in July 2013. This seasoning, combined with the improved credit quality, has decreased the overall credit risk profile. In addition, the number of issuers in the portfolio has increased during this period as a result of increased portfolio diversification.

Defaults and assets rated 'CCC+' and below have increased slightly since the effective date report. Specifically, the amount of defaulted assets reported increased to $2.86 million as of July 2016 from zero reported as of the effective date. The reported par balance of assets rated 'CCC+' and below increased to $14.43 million from only $1.69 million over the same period.

The level of credit support available to all tranches has remained stable and has only declined slightly, as observed in the overcollateralization (O/C) ratios as of July 2016 compared with the July 2013 effective date:The class A O/C ratio was 131.51%, down from 132.31%.The class B O/C ratio was 119.35%, down from 120.07%. The class C O/C ratio was 112.93%, down from 113.62%.The class D O/C ratio was 107.77%, down from 108.42%.The class E O/C ratio was 105.22%, down from 105.86%.The current coverage test ratios are also all passing and well above their minimum threshold values.

Overall, the increase in defaulted assets and assets rated 'CCC+' and below has been largely offset by the decline in the weighted average life and positive credit migration of the collateral portfolio.

Although our cash flow analysis indicated higher ratings for the class C and D notes, our rating actions consider the increase in defaults and slight decline in the credit support available to the notes. In addition, the ratings reflect additional sensitivity runs that allowed for volatility in the underlying portfolio because the transaction is still in its reinvestment period.

The affirmations of the ratings on the class A-1, C, D, and E notes reflect our belief that the credit support available is commensurate with the current rating levels.

There have been no paydowns to the rated notes since our last rating actions.

Our review of the transaction relied, in part, upon a criteria interpretation with respect to our May 2014 criteria, "CDOs: Mapping A Third Party's Internal Credit Scoring System To Standard & Poor's Global Rating Scale," which allows us to use a limited number of public ratings from other Nationally Recognized Statistical Rating Organizations (NRSROs) to assess the credit quality of assets not rated by S&P Global Ratings. The criteria provide specific guidance for the treatment of corporate assets not rated by S&P Global Ratings, while the interpretation outlines the treatment of securitized assets.

Our review of this transaction included a cash flow analysis, based on the portfolio and transaction as reflected in the aforementioned trustee report, to estimate future performance. In line with our criteria, our cash flow scenarios applied forward-looking assumptions on the expected timing and pattern of defaults, and recoveries upon default, under various interest rate and macroeconomic scenarios. In addition, our analysis considered the transaction's ability to pay timely interest and/or ultimate principal to each of the rated tranches. The results of the cash flow analysis demonstrated, in our view, that all of the rated outstanding classes have adequate credit enhancement available at the rating levels associated with these rating actions.

We will continue to review whether, in our view, the ratings assigned to the notes remain consistent with the credit enhancement available to support them, and will take rating actions as we deem necessary.