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

Today's rating actions follow our review of the transaction's performance, using data from the July 6, 2016, trustee report. The transaction is scheduledto remain in its reinvestment period until April 2017.

The upgrade primarily reflects credit quality improvement in the underlying collateral since our effective date rating affirmations in January 2014.

The transaction has also benefited from collateral seasoning, with the reported weighted average life decreasing to 4.70 years from 5.37 years in July 2013. This seasoning, combined with the improved credit quality (evident in the weighted average rating rising to 'B+' from 'B'), has decreased the overall credit risk profile, which, in turn, provided more cushion to the tranche ratings. In addition, the number of issuers in the portfolio has increased during this period, and the resultant diversification of the portfolio also contributed to the credit quality improvement.

The transaction has experienced an increase in both defaults and assets rated 'CCC+' and below since the July 2013 effective date report. Specifically, the amount of defaulted assets increased to $4.04 million from none as of the effective date report. The level of assets rated 'CCC+' and below increased to$23.8 million from $9.6 million over the same period. Overall, the increase indefaulted assets and assets rated 'CCC+' and below has been largely offset by the decline in the weighted average life and positive portfolio credit migration of the collateral portfolio. The increase in defaulted assets, as well as other factors, has affected the level of credit support available to all tranches, as seen by the mild decline in the overcollateralization (O/C) ratios:

The class A O/C ratio was 138.73%, down from the 139.49% reported in July 2013.

The class B O/C ratio was 122.57%, down from 123.24%.

The class C O/C ratio was 114.66%, down from 115.29%.

The class D O/C ratio was 108.98%, down from 109.57%.

The class E O/C ratio was 106.59%, down from 107.17%.

However, the current coverage test ratios are all passing and well above theirminimum threshold values. The upgrade of the rating on the class A-2 notes considers the overcollateralization supporting the notes in comparison to other transactions with similar diversity, weighted averaged ratings, and portfolio overlap.

Our cash flow analysis indicated higher ratings for the class B and C notes; however, our rating actions take into account additional sensitivity runs thatconsidered the exposure to specific distressed industries and allowed for volatility in the underlying portfolio given that the transaction is still in its reinvestment period.

Although the cash flow results indicated a lower rating for the class E notes, we view the overall credit seasoning as an improvement to the transaction and also considered the relatively stable O/C ratios that currently have significant cushion over their minimum requirements.

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

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.