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RIDGELINE CREDIT RATINGS LLC 7 World Trade Center, 30th Floor New York, NY 10007

Telephone: (212) 438-7200 Facsimile: (212) 438-7201 www.ridgelineratings.com

Delaware Limited Liability Company NRSRO Registered with the U.S. Securities and Exchange Commission

September 8, 2023

Driftwood CLO 2023-I, Ltd. PO Box 4927, Windward House, 3rd Floor George Town, Grand Cayman KY1-1306 Cayman Islands

Driftwood CLO 2023-I, LLC c/o National Registered Agents Inc. 1209 Orange Street Wilmington, DE 19801

Copy to:

Ironclad Trust Company, N.A., as Trustee and Collateral Administrator 100 Wall Street, Suite 1650 New York, NY 10005

Attention: Catherine Nowak, Vice President, Corporate Trust

Meridian Atlantic Securities LLC, as Lead Placement Agent 383 Madison Avenue, 22nd Floor New York, NY 10179

Attention: Jonathan Halevy, Managing Director, CLO Structuring & Origination

Calderwood & Harkness LLP, as Issuer's Counsel 450 Park Avenue New York, NY 10022

Attention: Samuel Eklund

Re: Driftwood CLO 2023-I — Confirmation of Final Ratings Assigned to Secured Notes and Subordinated Notes

Reference is made to (i) the Indenture dated as of August 22, 2023 (as supplemented by the First Supplemental Indenture dated as of September 8, 2023, and as may be further supplemented, amended, or restated from time to time, the "Indenture"), among Driftwood CLO 2023-I, Ltd. (the "Issuer"), Driftwood CLO 2023-I, LLC (the "Co-Issuer," and together with the Issuer, the "Issuers"), and Ironclad Trust Company, N.A., as Trustee and Collateral Administrator (the "Trustee"); (ii) the Note Purchase Agreement dated as of September 8, 2023 (the "Note Purchase Agreement"), among the Issuers, the Collateral Manager (as defined below), and the initial purchasers party thereto; and (iii) the Offering Memorandum dated as of August 18, 2023 (the "Offering Memorandum"), relating to the offering and sale of the notes described herein.

1. Introduction and Background

Ladies and Gentlemen:

Ridgeline Credit Ratings LLC ("Ridgeline" or "RCR") was engaged by the Issuer, Driftwood CLO 2023-I, Ltd., to assign credit ratings to certain classes of secured notes (the "Rated Notes") to be issued under the Indenture dated as of August 22, 2023, as more fully described herein. Such engagement was made pursuant to the Rating Agency Engagement Letter, dated as of July 14, 2023, between the Issuer and Ridgeline (the "Engagement Letter"), the terms and conditions of which are incorporated herein by reference to the extent not inconsistent with the terms of this letter.

Ridgeline is one of two nationally recognized statistical rating organizations ("NRSROs") providing credit ratings in connection with this transaction. The Rated Notes are dual-rated by Ridgeline and Brindoval Analytical Services Inc. ("Brindoval"), each acting independently in the assignment of its respective ratings. The ratings assigned by Ridgeline herein are Ridgeline's own ratings and reflect Ridgeline's independent analytical judgment. No inference should be drawn regarding the ratings assigned or to be assigned by Brindoval, and Ridgeline has not relied upon, and disclaims any responsibility for, the ratings or analysis of Brindoval in connection with this transaction.

The transaction to which this letter relates is a $400,000,000 broadly syndicated collateralized loan obligation (the "CLO" or the "Transaction") consisting of multiple tranches of secured notes and subordinated notes to be issued by the Issuers. The notes are backed by, and the payments on the notes are derived primarily from, a managed portfolio of broadly syndicated first-lien senior secured leveraged loans made principally to U.S. corporate obligors (the "Collateral Pool" or the "Portfolio"). The Transaction is structured as a cash flow CLO, with a Cayman Islands exempted company as Issuer and a Delaware limited liability company as Co-Issuer.

The Collateral Pool will be actively managed during the Reinvestment Period by Driftwood Credit Management LLC (the "Collateral Manager"), a Delaware limited liability company and an investment adviser registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended (CRD #182447). The Collateral Manager is responsible for the selection, acquisition, and disposition of the Collateral Obligations in the Portfolio in accordance with the eligibility criteria, portfolio quality tests, concentration limitations, and trading restrictions set forth in the Indenture.

Ridgeline communicated preliminary ratings on the Rated Notes to the Issuer, the Collateral Manager, and the Lead Placement Agent on August 4, 2023 (the "Preliminary Ratings"). The Preliminary Ratings were assigned on the basis of the draft Indenture, draft Offering Memorandum, and related draft transaction documents provided to Ridgeline as of that date, as well as the Collateral Manager's target portfolio characteristics and the indicative pricing terms then under discussion. This letter confirms the assignment of final ratings (the "Final Ratings") to each class of Rated Notes, effective as of September 8, 2023, the Pricing Date of the Transaction.

The Final Ratings set forth herein supersede and replace the Preliminary Ratings in their entirety. To the extent that the Preliminary Ratings differed from the Final Ratings assigned herein, such differences are attributable to changes in the final pricing terms, the final form of the Indenture, the final form of the Offering Memorandum, and the composition of the Collateral Pool as of the Pricing Date, each as described more fully herein.

2. Final Ratings Assigned

Ridgeline has completed its analysis of the Transaction and the transaction documents and hereby confirms the assignment of the following Final Ratings to the notes described below, effective as of September 8, 2023 (the "Pricing Date"):

The total aggregate principal amount of the Rated Notes is $364,000,000.

In addition to the Rated Notes, the Issuers will issue $36,000,000 in aggregate principal amount of Subordinated Notes (CUSIP: 26738TAF4) (the "Subordinated Notes"). The Subordinated Notes are not rated by Ridgeline, and Ridgeline expresses no opinion whatsoever as to the creditworthiness or investment merit of the Subordinated Notes. The Subordinated Notes represent the residual equity interest in the Transaction and are subordinated to all classes of Rated Notes in the priority of payments waterfall set forth in the Indenture.

The total capitalization of the Transaction, inclusive of both the Rated Notes and the Subordinated Notes, is $400,000,000.

The Rated Notes and the Subordinated Notes are being offered and sold to qualified institutional buyers in reliance upon the exemption from registration provided by Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and to certain non-U.S. persons in offshore transactions in reliance upon Regulation S under the Securities Act. The Class A-1 Notes are also being offered in Regulation S form under CUSIP G2694LAA7.

3. Spread Confirmation and Pricing Reference

The Final Ratings set forth in Section 2 above are assigned on the basis of the final pricing spreads and other terms agreed upon as of the Pricing Date, September 8, 2023, as follows:

For purposes of the foregoing, the following pricing conventions apply:

Reference Rate: Compounded Secured Overnight Financing Rate ("SOFR"), as published by the Federal Reserve Bank of New York (or a successor administrator), with a 26253 fallback convention as set forth in the Indenture, consistent with ARRC recommended fallback language for securitization transactions.

Day Count Convention: Actual/360.

Payment Date Frequency: Quarterly, on the 15th day of January, April, July, and October of each year, commencing on January 15, 2024 (the "First Payment Date"), or if any such day is not a Business Day, the next succeeding Business Day (subject to the modified following business day convention).

First Payment Date: January 15, 2024.

Record Date: The last Business Day of the calendar month immediately preceding the applicable Payment Date, as set forth in the Indenture.

Ridgeline has reviewed the final pricing spreads set forth above and confirms that such spreads are consistent with the assumptions incorporated into Ridgeline's cash flow modeling and credit analysis. The Final Ratings take into account the cost of liabilities at the spreads indicated above and the expected excess spread generated by the Collateral Pool under both base case and stress scenarios.

4. Key Structural Features Considered

In assigning the Final Ratings, Ridgeline considered, among other factors, the following key structural features of the Transaction, as set forth in the Indenture and the related transaction documents:

4.1 Maturity and Structural Timeline

Stated Maturity Date: October 15, 2036.

Closing Date: September 12, 2023.

Non-Call Period: The Non-Call Period ends on September 12, 2025, which is two (2) years from the Closing Date. During the Non-Call Period, the Rated Notes may not be redeemed at the option of the holders of the Subordinated Notes or, subject to certain exceptions, at the direction of the Collateral Manager.

Reinvestment Period: The Reinvestment Period ends on September 12, 2028, which is five (5) years from the Closing Date. During the Reinvestment Period, the Collateral Manager may reinvest Principal Proceeds in additional Collateral Obligations, subject to the eligibility criteria, portfolio quality tests, and concentration limitations set forth in the Indenture.

Effective Date Deadline: December 12, 2023, which is ninety (90) calendar days following the Pricing Date. The Issuer is required to satisfy the Effective Date Conditions set forth in the Indenture, including the Target Par Condition, on or prior to the Effective Date Deadline.

Target Portfolio Par: $400,000,000.

4.2 Subordination Levels

The subordination levels applicable to each class of Rated Notes, expressed as a percentage of the Target Portfolio Par, are as follows:

Ridgeline's analysis considered the subordination levels indicated above in conjunction with expected loss distributions under various default and recovery stress scenarios. The subordination levels represent the principal amount of notes and equity subordinated to each class, which serves as credit enhancement providing protection against credit losses in the Collateral Pool.

4.3 Overcollateralization Tests

The Indenture provides for the following overcollateralization ("O/C") test trigger levels, which are tested on each Determination Date with respect to each Payment Date:

A breach of any O/C test on a Determination Date will result in the diversion of Interest Proceeds and, in certain circumstances, Principal Proceeds, in accordance with the priority of payments waterfall set forth in the Indenture, to redeem the most senior outstanding class of Rated Notes until the applicable O/C test is restored to compliance. The O/C tests serve as structural triggers that de-lever the Transaction in periods of collateral credit deterioration, thereby providing dynamic credit protection to the senior classes of Rated Notes.

4.4 Interest Coverage Tests

The Indenture also provides for the following interest coverage ("I/C") test trigger levels, which are tested on each Determination Date with respect to each Payment Date:

The I/C tests measure the ratio of the scheduled interest collections on the Collateral Pool to the aggregate interest payable on the applicable class of Rated Notes (and all classes senior thereto). A breach of an I/C test results in the diversion of Interest Proceeds and, in certain circumstances, Principal Proceeds, in accordance with the priority of payments waterfall, to redeem the most senior outstanding class of Rated Notes until the applicable I/C test is restored to compliance.

4.5 Collateral Quality Criteria

Ridgeline assessed the following collateral quality criteria as set forth in the Indenture and as applied to the target portfolio composition communicated by the Collateral Manager as of the Pricing Date:

Minimum Weighted Average Spread: 350 basis points (3.50%).

Maximum Weighted Average Life: 7.5 years.

Minimum Diversity Score: 60.

Maximum CCC Bucket: 7.5% of the aggregate collateral par amount, or $30,000,000 based on a $400,000,000 Target Portfolio Par. Collateral Obligations rated "CCC+" or below (or the equivalent) in excess of the 7.5% threshold are carried at the lower of their par amount and market value for purposes of the O/C tests.

Maximum Second-Lien Bucket: 5.0% of the aggregate collateral par amount, or $20,000,000 based on the Target Portfolio Par.

Maximum Fixed-Rate Bucket: 10.0% of the aggregate collateral par amount, or $40,000,000 based on the Target Portfolio Par.

Minimum Weighted Average Recovery Rate: 45.0%.

Minimum Weighted Average Rating Factor ("WARF"): 2,850. The WARF is a numerical measure of the credit quality of the Collateral Pool, with a higher WARF indicating lower average credit quality. The minimum WARF of 2,850 corresponds approximately to an average credit quality in the range of "B2" to "B3" on the Ridgeline rating scale, which is consistent with a portfolio of broadly syndicated leveraged loans to below-investment-grade corporate obligors.

Ridgeline's rating analysis incorporated the foregoing collateral quality criteria as constraints on the Collateral Pool composition in its cash flow modeling and in its assessment of the expected credit performance of the Transaction.

5. Basis of Rating and Analytical Considerations

The Final Ratings assigned herein reflect Ridgeline's assessment of the following factors, each of which was considered in Ridgeline's credit analysis:

(a) Credit Quality and Diversification of the Collateral Pool. Ridgeline evaluated the credit quality and obligor diversification of the underlying Collateral Pool of broadly syndicated first-lien senior secured leveraged loans. The analysis considered the distribution of individual obligor credit quality ratings, industry and sector concentrations, geographic concentrations, and the overall diversity score of the Portfolio. Ridgeline applied its proprietary default probability and loss severity assumptions to the Portfolio, taking into account the seniority and security of the underlying loan positions, the expected recovery rates for first-lien senior secured loans in default, and the correlation assumptions applicable to a diversified portfolio of leveraged loans to U.S. corporate obligors.

(b) Structural Protections. Ridgeline assessed the structural protections provided by the subordination levels, the O/C tests, the I/C tests, the priority of payments waterfall, the event of default provisions, and the trading restrictions set forth in the Indenture. Ridgeline considered the effectiveness of these structural features in protecting the Rated Notes against credit losses in the Collateral Pool under both base case and stress scenarios. In particular, Ridgeline evaluated the de-leveraging mechanisms triggered by O/C and I/C test breaches and the resulting acceleration of principal payments to the senior classes of Rated Notes.

(c) Collateral Manager Experience and Track Record. Ridgeline considered the experience and track record of Driftwood Credit Management LLC as Collateral Manager, including the investment management track record of the firm and the oversight of David Hwan, Managing Director, Structured Credit. Ridgeline reviewed the Collateral Manager's historical CLO management performance, including default rates, loss rates, and portfolio turnover across prior CLO vintages managed by Driftwood Credit Management LLC. Ridgeline considered the Collateral Manager's credit analysis capabilities, investment processes, and operational infrastructure.

(d) Legal Structure. Ridgeline evaluated the legal structure of the Transaction, including the use of a Cayman Islands exempted company as Issuer and a Delaware limited liability company as Co-Issuer. Ridgeline considered the bankruptcy-remoteness of the Issuer and the Co-Issuer, the limited-purpose nature of the Issuer, the validity and enforceability of the security interest granted by the Issuer to the Trustee for the benefit of the noteholders, and the limited recourse nature of the obligations of the Issuers under the Rated Notes and the Indenture. In connection with its analysis, Ridgeline has reviewed and relied upon legal opinions delivered by Issuer's Counsel and local Cayman Islands counsel, as described in the Indenture and the Offering Memorandum.

(e) Cash Flow Modeling and Stress Scenario Analysis. Ridgeline conducted cash flow modeling and stress scenario analysis, completed on July 28, 2023, using Ridgeline's proprietary CLO cash flow model. The cash flow model projected the expected cash flows of the Transaction under a range of scenarios, including variations in default rates, default timing patterns (front-loaded, back-loaded, and evenly distributed), recovery rates and recovery timing, prepayment rates, reinvestment assumptions, and interest rate paths. The stress scenarios were calibrated to the rating levels assigned to each class of Rated Notes, with higher-rated classes subjected to more severe stress assumptions. Ridgeline's analysis confirmed that the structural protections and subordination levels provided in the Indenture are sufficient to support the Final Ratings assigned to each class of Rated Notes under Ridgeline's applicable rating criteria.

(f) Priority of Payments Waterfall, Trading Restrictions, and Events of Default. Ridgeline reviewed the provisions of the Indenture governing the priority of payments waterfall (including the Interest Proceeds waterfall and the Principal Proceeds waterfall), the restrictions on the Collateral Manager's ability to trade Collateral Obligations (including the conditions to reinvestment, discretionary trading, and credit-risk and credit-improved trading), and the events of default and acceleration provisions. Ridgeline's analysis considered the sequential payment structure of the Rated Notes, the conditions under which Interest Proceeds and Principal Proceeds may be diverted from subordinated classes to senior classes, and the protections afforded to the Rated Notes upon the occurrence and continuation of an event of default under the Indenture.

6. Conditions and Limitations

The Final Ratings assigned herein are subject to the following conditions and limitations:

(a) The Final Ratings are based upon information provided to Ridgeline through the Offering Memorandum dated as of August 18, 2023, the Indenture dated as of August 22, 2023, the First Supplemental Indenture dated as of September 8, 2023, the Note Purchase Agreement dated as of September 8, 2023, the Collateral Management Agreement, the Collateral Administration Agreement, and the other related transaction documents provided to Ridgeline on or prior to the date hereof (collectively, the "Transaction Documents"). The Final Ratings have been assigned on the assumption that the executed versions of the Transaction Documents will conform in all material respects to the forms reviewed by Ridgeline.

(b) The Final Ratings are subject to ongoing surveillance by Ridgeline and may be revised upward or downward, placed on credit watch, suspended, or withdrawn at any time at Ridgeline's sole and absolute discretion, without prior notice to the Issuers, the Collateral Manager, the Trustee, the Placement Agents, any noteholder, or any other party. Such revisions may result from changes in the credit quality of the Collateral Pool, structural performance, macroeconomic conditions, changes in Ridgeline's rating criteria or methodology, or any other factors deemed relevant by Ridgeline.

(c) Ridgeline has not verified, and does not undertake to verify, the accuracy or completeness of the information provided to it by the Issuer, the Collateral Manager, the Trustee, Issuer's Counsel, or any other party to the Transaction. Ridgeline has relied upon the representations, warranties, and certifications of the Issuer, the Collateral Manager, and their respective counsel as set forth in the Transaction Documents and in the information provided to Ridgeline in connection with its analysis. Ridgeline assumes no responsibility for the accuracy or completeness of such information.

(d) The Final Ratings address the likelihood of timely payment of interest on each class of Rated Notes on each applicable Payment Date, and the ultimate payment of principal on each class of Rated Notes on or before the Stated Maturity Date (October 15, 2036). The Final Ratings do not address:

(i) the payment of any incentive collateral management fees, subordinated collateral management fees, or any other fees or expenses payable by the Issuer that are subordinated to the Rated Notes in the priority of payments waterfall;

(ii) any residual distributions to the holders of the Subordinated Notes;

(iii) the market value or price volatility of any class of Rated Notes or the Subordinated Notes;

(iv) the suitability of any class of Rated Notes or the Subordinated Notes for any particular investor or class of investors; or

(v) any tax consequences arising from the purchase, ownership, or disposition of any class of Rated Notes or the Subordinated Notes.

(e) The Final Ratings do not constitute, and shall not be deemed to constitute, a recommendation by Ridgeline to purchase, sell, or hold any class of Rated Notes or any other security issued in connection with the Transaction. The Final Ratings should be evaluated independently by each investor and should not be relied upon as the sole basis for any investment decision.

7. Conditions to Closing Compliance

This letter is delivered in satisfaction of the closing condition set forth in Section 2.3(b)(iv) of the Indenture dated as of August 22, 2023 (as supplemented by the First Supplemental Indenture dated as of September 8, 2023), which requires that each Rating Agency (as defined in the Indenture) shall have delivered to the Trustee, on or prior to the Closing Date of September 12, 2023, a letter confirming the assignment of ratings to each class of Rated Notes to be issued on the Closing Date in the amounts and at the spreads set forth in the Indenture and the First Supplemental Indenture.

This letter is also delivered in satisfaction of the corresponding closing condition set forth in Section 6(a)(vii) of the Note Purchase Agreement dated as of September 8, 2023, which requires delivery of a rating confirmation letter from each Rating Agency as a condition precedent to the obligations of the Initial Purchasers (as defined in the Note Purchase Agreement) to purchase the Rated Notes on the Closing Date.

Ridgeline hereby confirms that the issuance of the Rated Notes in the aggregate principal amounts and at the pricing spreads set forth in Sections 2 and 3 of this letter will not, in and of itself, result in the withdrawal, downgrade, or placement on negative watch of any of the Final Ratings assigned herein. This confirmation is limited to the specific circumstances described herein and shall not be construed as a commitment by Ridgeline to maintain the Final Ratings at their current levels for any specified period of time or under any future conditions.

8. Ongoing Surveillance

Ridgeline will provide ongoing surveillance of the Final Ratings assigned to the Rated Notes for so long as any class of Rated Notes remains outstanding. Ongoing surveillance will include, without limitation, periodic review of the credit quality and composition of the Collateral Pool, the results of the O/C tests and I/C tests, the performance of the priority of payments waterfall, and the overall structural performance of the Transaction.

The Issuer and the Collateral Manager have agreed, pursuant to the Engagement Letter and the terms of the Indenture, to provide Ridgeline with periodic reports and data necessary for Ridgeline to conduct its ongoing surveillance, including, without limitation:

(a) quarterly trustee reports prepared by Ironclad Trust Company, N.A., acting in its capacity as Collateral Administrator, within the time periods specified in the Indenture;

(b) monthly surveillance reports prepared by the Collateral Manager, including portfolio stratification data, credit quality migration data, and trading activity summaries;

(d) prompt notice of any material amendment, supplement, or modification to the Indenture or any other Transaction Document; and

(e) such other information as Ridgeline may reasonably request from time to time in connection with its ongoing surveillance of the Transaction.

Ridgeline reserves the right, at its sole and absolute discretion, to adjust, revise, upgrade, downgrade, place on credit watch, suspend, or withdraw any or all of the Final Ratings assigned herein, at any time and without prior notice, based on changes in the credit quality of the Collateral Pool, structural performance of the Transaction, changes in Ridgeline's rating criteria or methodology, or any other factors deemed relevant by Ridgeline in its independent analytical judgment.

9. Confidentiality and Use

This letter is confidential and proprietary to Ridgeline and is provided solely for the use of the addressees named herein and their respective legal counsel, in each case solely in connection with the Driftwood CLO 2023-I Transaction and the issuance, offering, and sale of the Rated Notes and the Subordinated Notes as described herein.

This letter may be included in, or referenced by, the Offering Memorandum and the closing deliverables for the Transaction, including, without limitation, the closing binder to be prepared by Issuer's Counsel. Ridgeline consents to the inclusion of a reference to Ridgeline's ratings in the Offering Memorandum, provided that any such reference accurately reflects the Final Ratings set forth herein and is accompanied by appropriate disclosure, including the disclaimer language required by Ridgeline's standard terms and conditions and the provisions of applicable SEC and NRSRO regulations.

No other use, reproduction, or distribution of this letter, in whole or in part, is authorized without the prior written consent of Ridgeline. Any unauthorized use or distribution of this letter shall constitute a material breach of the Engagement Letter and may give rise to claims by Ridgeline for damages and injunctive relief.

10. Limitation of Liability and Disclaimer

THE FINAL RATINGS ASSIGNED HEREIN ARE EXPRESSIONS OF RIDGELINE'S CURRENT OPINION REGARDING THE CREDITWORTHINESS OF THE RATED NOTES AND ARE NOT STATEMENTS OF FACT. THE FINAL RATINGS DO NOT CONSTITUTE, AND SHALL NOT BE DEEMED TO CONSTITUTE, AN AUDIT, A GUARANTEE OF CREDIT QUALITY, OR A RECOMMENDATION TO PURCHASE, SELL, OR HOLD ANY SECURITY. RIDGELINE DOES NOT AUDIT OR INDEPENDENTLY VERIFY THE INFORMATION PROVIDED BY THE ISSUER, THE COLLATERAL MANAGER, OR THEIR AGENTS, AND ASSUMES NO RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, OR TIMELINESS OF SUCH INFORMATION.

RIDGELINE'S RATINGS ARE BASED ON INFORMATION AVAILABLE TO RIDGELINE AS OF THE DATE HEREOF AND ARE SUBJECT TO CHANGE, REVISION, SUSPENSION, OR WITHDRAWAL AT ANY TIME AT RIDGELINE'S SOLE DISCRETION AND WITHOUT PRIOR NOTICE. RIDGELINE DOES NOT UNDERTAKE ANY OBLIGATION TO UPDATE, REVISE, OR SUPPLEMENT THIS LETTER OR THE FINAL RATINGS ASSIGNED HEREIN, EXCEPT AS REQUIRED BY APPLICABLE LAW OR REGULATION OR AS RIDGELINE MAY DETERMINE IN ITS SOLE DISCRETION IN CONNECTION WITH ITS ONGOING SURVEILLANCE ACTIVITIES.

IN NO EVENT SHALL RIDGELINE, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, OR AFFILIATES BE LIABLE TO THE ISSUER, THE CO-ISSUER, THE COLLATERAL MANAGER, THE TRUSTEE, THE PLACEMENT AGENTS, ANY NOTEHOLDER, OR ANY OTHER PERSON OR ENTITY FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATING TO THE FINAL RATINGS ASSIGNED HEREIN, THIS LETTER, OR ANY OTHER INFORMATION OR ANALYSIS PROVIDED BY RIDGELINE IN CONNECTION WITH THE TRANSACTION, REGARDLESS OF WHETHER SUCH LIABILITY ARISES IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY, OR OTHERWISE, AND REGARDLESS OF WHETHER RIDGELINE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

THE FOREGOING LIMITATION OF LIABILITY SHALL APPLY TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW AND SHALL SURVIVE THE TERMINATION OR EXPIRATION OF THE ENGAGEMENT LETTER AND ANY OTHER AGREEMENT BETWEEN RIDGELINE AND THE ISSUER OR ANY OTHER PARTY TO THE TRANSACTION.

This letter shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles.

If you have any questions regarding this letter or the Final Ratings assigned herein, please do not hesitate to contact the undersigned at (212) 438-7240 or kenji.matsuda@ridgelineratings.com.

[Remainder of this page intentionally left blank. Signature page follows.]

Very truly yours,

RIDGELINE CREDIT RATINGS LLC

By: ________

Name: Kenji Matsuda

Title: Director, CLO Ratings

Date: September 8, 2023

Ridgeline Credit Ratings LLC 7 World Trade Center, 30th Floor New York, NY 10007 Telephone: (212) 438-7240

Email: kenji.matsuda@ridgelineratings.com

cc: (via electronic mail)

Driftwood Credit Management LLC 200 Brickell Avenue, Suite 3100 Miami, FL 33131

Attention: David Hwan, Managing Director, Structured Credit

Northbridge Capital Markets Inc. (Co-Placement Agent) 1251 Avenue of the Americas, 34th Floor New York, NY 10020

Attention: Raymond Cho, SVP, Structured Credit Sales

Barrington, Locke & Hayes LLP (Placement Agent's Counsel) 601 Lexington Avenue New York, NY 10022

Attention: Gregory Fontaine, Partner

Ashworth & Pratt LLP (Trustee's Counsel) One Liberty Plaza, 46th Floor New York, NY 10006

Attention: Lillian Marchetti, Partner

Class	CUSIP (144A)	CUSIP (Reg S)	ISIN (144A)	Aggregate Principal Amount	Final Ridgeline Rating
Class A-1 Notes	26738TAA5	G2694LAA7	US26738TAA51	$256,000,000	AAA
Class A-2 Notes	26738TAB3	—	—	$40,000,000	AA
Class B Notes	26738TAC1	—	—	$28,000,000	A
Class C Notes	26738TAD9	—	—	$24,000,000	BBB
Class D Notes	26738TAE7	—	—	$16,000,000	BB
Class	Interest Rate	Spread over Reference Rate
Class A-1 Notes	Compounded SOFR + 155 bps	+1.55%
Class A-2 Notes	Compounded SOFR + 190 bps	+1.90%
Class B Notes	Compounded SOFR + 230 bps	+2.30%
Class C Notes	Compounded SOFR + 310 bps	+3.10%
Class D Notes	Compounded SOFR + 625 bps	+6.25%
Class	Subordination Level	Dollar Amount of Credit Enhancement
Class A-1 Notes	36.00%	$144,000,000
Class A-2 Notes	26.00%	$104,000,000
Class B Notes	19.00%	$76,000,000
Class C Notes	13.00%	$52,000,000
Class D Notes	9.00%	$36,000,000
O/C Test	Trigger Level
Class A O/C Test	128.00%
Class B O/C Test	118.00%
Class C O/C Test	110.00%
Class D O/C Test	105.50%
I/C Test	Trigger Level
Class A I/C Test	120.00%

Class B I/C Test	115.00%
Class C I/C Test	110.00%
Class D I/C Test	105.00%

RIDGELINE CREDIT RATINGS LLC 7 World Trade Center, 30th Floor New York, NY 10007
Telephone: (212) 438-7200 Facsimile: (212) 438-7201 www.ridgelineratings.com
Delaware Limited Liability Company NRSRO Registered with the U.S. Securities and Exchange Commission
September 8, 2023
Driftwood CLO 2023-I, Ltd. PO Box 4927, Windward House, 3rd Floor George Town, Grand Cayman KY1-1306 Cayman Islands
Driftwood CLO 2023-I, LLC c/o National Registered Agents Inc. 1209 Orange Street Wilmington, DE 19801
Copy to:
Ironclad Trust Company, N.A., as Trustee and Collateral Administrator 100 Wall Street, Suite 1650 New York, NY 10005
Attention: Catherine Nowak, Vice President, Corporate Trust
Meridian Atlantic Securities LLC, as Lead Placement Agent 383 Madison Avenue, 22nd Floor New York, NY 10179
Attention: Jonathan Halevy, Managing Director, CLO Structuring & Origination
Calderwood & Harkness LLP, as Issuer's Counsel 450 Park Avenue New York, NY 10022
Attention: Samuel Eklund
Re: Driftwood CLO 2023-I — Confirmation of Final Ratings Assigned to Secured Notes and Subordinated Notes
Reference is made to (i) the Indenture dated as of August 22, 2023 (as supplemented by the First Supplemental Indenture dated as of September 8, 2023, and as may be further supplemented, amended, or restated from time to time, the "Indenture"), among Driftwood CLO 2023-I, Ltd. (the "Issuer"), Driftwood CLO 2023-I, LLC (the "Co-Issuer," and together with the Issuer, the "Issuers"), and Ironclad Trust Company, N.A., as Trustee and Collateral Administrator (the "Trustee"); (ii) the Note Purchase Agreement dated as of September 8, 2023 (the "Note Purchase Agreement"), among the Issuers, the Collateral Manager (as defined below), and the initial purchasers party thereto; and (iii) the Offering Memorandum dated as of August 18, 2023 (the "Offering Memorandum"), relating to the offering and sale of the notes described herein.
1. Introduction and Background
Ladies and Gentlemen:
Ridgeline Credit Ratings LLC ("Ridgeline" or "RCR") was engaged by the Issuer, Driftwood CLO 2023-I, Ltd., to assign credit ratings to certain classes of secured notes (the "Rated Notes") to be issued under the Indenture dated as of August 22, 2023, as more fully described herein. Such engagement was made pursuant to the Rating Agency Engagement Letter, dated as of July 14, 2023, between the Issuer and Ridgeline (the "Engagement Letter"), the terms and conditions of which are incorporated herein by reference to the extent not inconsistent with the terms of this letter.
Ridgeline is one of two nationally recognized statistical rating organizations ("NRSROs") providing credit ratings in connection with this transaction. The Rated Notes are dual-rated by Ridgeline and Brindoval Analytical Services Inc. ("Brindoval"), each acting independently in the assignment of its respective ratings. The ratings assigned by Ridgeline herein are Ridgeline's own ratings and reflect Ridgeline's independent analytical judgment. No inference should be drawn regarding the ratings assigned or to be assigned by Brindoval, and Ridgeline has not relied upon, and disclaims any responsibility for, the ratings or analysis of Brindoval in connection with this transaction.
The transaction to which this letter relates is a $400,000,000 broadly syndicated collateralized loan obligation (the "CLO" or the "Transaction") consisting of multiple tranches of secured notes and subordinated notes to be issued by the Issuers. The notes are backed by, and the payments on the notes are derived primarily from, a managed portfolio of broadly syndicated first-lien senior secured leveraged loans made principally to U.S. corporate obligors (the "Collateral Pool" or the "Portfolio"). The Transaction is structured as a cash flow CLO, with a Cayman Islands exempted company as Issuer and a Delaware limited liability company as Co-Issuer.
The Collateral Pool will be actively managed during the Reinvestment Period by Driftwood Credit Management LLC (the "Collateral Manager"), a Delaware limited liability company and an investment adviser registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended (CRD #182447). The Collateral Manager is responsible for the selection, acquisition, and disposition of the Collateral Obligations in the Portfolio in accordance with the eligibility criteria, portfolio quality tests, concentration limitations, and trading restrictions set forth in the Indenture.
Ridgeline communicated preliminary ratings on the Rated Notes to the Issuer, the Collateral Manager, and the Lead Placement Agent on August 4, 2023 (the "Preliminary Ratings"). The Preliminary Ratings were assigned on the basis of the draft Indenture, draft Offering Memorandum, and related draft transaction documents provided to Ridgeline as of that date, as well as the Collateral Manager's target portfolio characteristics and the indicative pricing terms then under discussion. This letter confirms the assignment of final ratings (the "Final Ratings") to each class of Rated Notes, effective as of September 8, 2023, the Pricing Date of the Transaction.
The Final Ratings set forth herein supersede and replace the Preliminary Ratings in their entirety. To the extent that the Preliminary Ratings differed from the Final Ratings assigned herein, such differences are attributable to changes in the final pricing terms, the final form of the Indenture, the final form of the Offering Memorandum, and the composition of the Collateral Pool as of the Pricing Date, each as described more fully herein.
2. Final Ratings Assigned
Ridgeline has completed its analysis of the Transaction and the transaction documents and hereby confirms the assignment of the following Final Ratings to the notes described below, effective as of September 8, 2023 (the "Pricing Date"):
The total aggregate principal amount of the Rated Notes is $364,000,000.
In addition to the Rated Notes, the Issuers will issue $36,000,000 in aggregate principal amount of Subordinated Notes (CUSIP: 26738TAF4) (the "Subordinated Notes"). The Subordinated Notes are not rated by Ridgeline, and Ridgeline expresses no opinion whatsoever as to the creditworthiness or investment merit of the Subordinated Notes. The Subordinated Notes represent the residual equity interest in the Transaction and are subordinated to all classes of Rated Notes in the priority of payments waterfall set forth in the Indenture.
The total capitalization of the Transaction, inclusive of both the Rated Notes and the Subordinated Notes, is $400,000,000.
The Rated Notes and the Subordinated Notes are being offered and sold to qualified institutional buyers in reliance upon the exemption from registration provided by Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and to certain non-U.S. persons in offshore transactions in reliance upon Regulation S under the Securities Act. The Class A-1 Notes are also being offered in Regulation S form under CUSIP G2694LAA7.
3. Spread Confirmation and Pricing Reference
The Final Ratings set forth in Section 2 above are assigned on the basis of the final pricing spreads and other terms agreed upon as of the Pricing Date, September 8, 2023, as follows:
For purposes of the foregoing, the following pricing conventions apply:
Reference Rate: Compounded Secured Overnight Financing Rate ("SOFR"), as published by the Federal Reserve Bank of New York (or a successor administrator), with a 26253 fallback convention as set forth in the Indenture, consistent with ARRC recommended fallback language for securitization transactions.
Day Count Convention: Actual/360.
Payment Date Frequency: Quarterly, on the 15th day of January, April, July, and October of each year, commencing on January 15, 2024 (the "First Payment Date"), or if any such day is not a Business Day, the next succeeding Business Day (subject to the modified following business day convention).
First Payment Date: January 15, 2024.
Record Date: The last Business Day of the calendar month immediately preceding the applicable Payment Date, as set forth in the Indenture.
Ridgeline has reviewed the final pricing spreads set forth above and confirms that such spreads are consistent with the assumptions incorporated into Ridgeline's cash flow modeling and credit analysis. The Final Ratings take into account the cost of liabilities at the spreads indicated above and the expected excess spread generated by the Collateral Pool under both base case and stress scenarios.
4. Key Structural Features Considered
In assigning the Final Ratings, Ridgeline considered, among other factors, the following key structural features of the Transaction, as set forth in the Indenture and the related transaction documents:
4.1 Maturity and Structural Timeline
Stated Maturity Date: October 15, 2036.
Closing Date: September 12, 2023.
Non-Call Period: The Non-Call Period ends on September 12, 2025, which is two (2) years from the Closing Date. During the Non-Call Period, the Rated Notes may not be redeemed at the option of the holders of the Subordinated Notes or, subject to certain exceptions, at the direction of the Collateral Manager.
Reinvestment Period: The Reinvestment Period ends on September 12, 2028, which is five (5) years from the Closing Date. During the Reinvestment Period, the Collateral Manager may reinvest Principal Proceeds in additional Collateral Obligations, subject to the eligibility criteria, portfolio quality tests, and concentration limitations set forth in the Indenture.
Effective Date Deadline: December 12, 2023, which is ninety (90) calendar days following the Pricing Date. The Issuer is required to satisfy the Effective Date Conditions set forth in the Indenture, including the Target Par Condition, on or prior to the Effective Date Deadline.
Target Portfolio Par: $400,000,000.
4.2 Subordination Levels
The subordination levels applicable to each class of Rated Notes, expressed as a percentage of the Target Portfolio Par, are as follows:
Ridgeline's analysis considered the subordination levels indicated above in conjunction with expected loss distributions under various default and recovery stress scenarios. The subordination levels represent the principal amount of notes and equity subordinated to each class, which serves as credit enhancement providing protection against credit losses in the Collateral Pool.
4.3 Overcollateralization Tests
The Indenture provides for the following overcollateralization ("O/C") test trigger levels, which are tested on each Determination Date with respect to each Payment Date:
A breach of any O/C test on a Determination Date will result in the diversion of Interest Proceeds and, in certain circumstances, Principal Proceeds, in accordance with the priority of payments waterfall set forth in the Indenture, to redeem the most senior outstanding class of Rated Notes until the applicable O/C test is restored to compliance. The O/C tests serve as structural triggers that de-lever the Transaction in periods of collateral credit deterioration, thereby providing dynamic credit protection to the senior classes of Rated Notes.
4.4 Interest Coverage Tests
The Indenture also provides for the following interest coverage ("I/C") test trigger levels, which are tested on each Determination Date with respect to each Payment Date:
The I/C tests measure the ratio of the scheduled interest collections on the Collateral Pool to the aggregate interest payable on the applicable class of Rated Notes (and all classes senior thereto). A breach of an I/C test results in the diversion of Interest Proceeds and, in certain circumstances, Principal Proceeds, in accordance with the priority of payments waterfall, to redeem the most senior outstanding class of Rated Notes until the applicable I/C test is restored to compliance.
4.5 Collateral Quality Criteria
Ridgeline assessed the following collateral quality criteria as set forth in the Indenture and as applied to the target portfolio composition communicated by the Collateral Manager as of the Pricing Date:
Minimum Weighted Average Spread: 350 basis points (3.50%).
Maximum Weighted Average Life: 7.5 years.
Minimum Diversity Score: 60.
Maximum CCC Bucket: 7.5% of the aggregate collateral par amount, or $30,000,000 based on a $400,000,000 Target Portfolio Par. Collateral Obligations rated "CCC+" or below (or the equivalent) in excess of the 7.5% threshold are carried at the lower of their par amount and market value for purposes of the O/C tests.
Maximum Second-Lien Bucket: 5.0% of the aggregate collateral par amount, or $20,000,000 based on the Target Portfolio Par.
Maximum Fixed-Rate Bucket: 10.0% of the aggregate collateral par amount, or $40,000,000 based on the Target Portfolio Par.
Minimum Weighted Average Recovery Rate: 45.0%.
Minimum Weighted Average Rating Factor ("WARF"): 2,850. The WARF is a numerical measure of the credit quality of the Collateral Pool, with a higher WARF indicating lower average credit quality. The minimum WARF of 2,850 corresponds approximately to an average credit quality in the range of "B2" to "B3" on the Ridgeline rating scale, which is consistent with a portfolio of broadly syndicated leveraged loans to below-investment-grade corporate obligors.
Ridgeline's rating analysis incorporated the foregoing collateral quality criteria as constraints on the Collateral Pool composition in its cash flow modeling and in its assessment of the expected credit performance of the Transaction.
5. Basis of Rating and Analytical Considerations
The Final Ratings assigned herein reflect Ridgeline's assessment of the following factors, each of which was considered in Ridgeline's credit analysis:
(a) Credit Quality and Diversification of the Collateral Pool. Ridgeline evaluated the credit quality and obligor diversification of the underlying Collateral Pool of broadly syndicated first-lien senior secured leveraged loans. The analysis considered the distribution of individual obligor credit quality ratings, industry and sector concentrations, geographic concentrations, and the overall diversity score of the Portfolio. Ridgeline applied its proprietary default probability and loss severity assumptions to the Portfolio, taking into account the seniority and security of the underlying loan positions, the expected recovery rates for first-lien senior secured loans in default, and the correlation assumptions applicable to a diversified portfolio of leveraged loans to U.S. corporate obligors.
(b) Structural Protections. Ridgeline assessed the structural protections provided by the subordination levels, the O/C tests, the I/C tests, the priority of payments waterfall, the event of default provisions, and the trading restrictions set forth in the Indenture. Ridgeline considered the effectiveness of these structural features in protecting the Rated Notes against credit losses in the Collateral Pool under both base case and stress scenarios. In particular, Ridgeline evaluated the de-leveraging mechanisms triggered by O/C and I/C test breaches and the resulting acceleration of principal payments to the senior classes of Rated Notes.
(c) Collateral Manager Experience and Track Record. Ridgeline considered the experience and track record of Driftwood Credit Management LLC as Collateral Manager, including the investment management track record of the firm and the oversight of David Hwan, Managing Director, Structured Credit. Ridgeline reviewed the Collateral Manager's historical CLO management performance, including default rates, loss rates, and portfolio turnover across prior CLO vintages managed by Driftwood Credit Management LLC. Ridgeline considered the Collateral Manager's credit analysis capabilities, investment processes, and operational infrastructure.
(d) Legal Structure. Ridgeline evaluated the legal structure of the Transaction, including the use of a Cayman Islands exempted company as Issuer and a Delaware limited liability company as Co-Issuer. Ridgeline considered the bankruptcy-remoteness of the Issuer and the Co-Issuer, the limited-purpose nature of the Issuer, the validity and enforceability of the security interest granted by the Issuer to the Trustee for the benefit of the noteholders, and the limited recourse nature of the obligations of the Issuers under the Rated Notes and the Indenture. In connection with its analysis, Ridgeline has reviewed and relied upon legal opinions delivered by Issuer's Counsel and local Cayman Islands counsel, as described in the Indenture and the Offering Memorandum.
(e) Cash Flow Modeling and Stress Scenario Analysis. Ridgeline conducted cash flow modeling and stress scenario analysis, completed on July 28, 2023, using Ridgeline's proprietary CLO cash flow model. The cash flow model projected the expected cash flows of the Transaction under a range of scenarios, including variations in default rates, default timing patterns (front-loaded, back-loaded, and evenly distributed), recovery rates and recovery timing, prepayment rates, reinvestment assumptions, and interest rate paths. The stress scenarios were calibrated to the rating levels assigned to each class of Rated Notes, with higher-rated classes subjected to more severe stress assumptions. Ridgeline's analysis confirmed that the structural protections and subordination levels provided in the Indenture are sufficient to support the Final Ratings assigned to each class of Rated Notes under Ridgeline's applicable rating criteria.
(f) Priority of Payments Waterfall, Trading Restrictions, and Events of Default. Ridgeline reviewed the provisions of the Indenture governing the priority of payments waterfall (including the Interest Proceeds waterfall and the Principal Proceeds waterfall), the restrictions on the Collateral Manager's ability to trade Collateral Obligations (including the conditions to reinvestment, discretionary trading, and credit-risk and credit-improved trading), and the events of default and acceleration provisions. Ridgeline's analysis considered the sequential payment structure of the Rated Notes, the conditions under which Interest Proceeds and Principal Proceeds may be diverted from subordinated classes to senior classes, and the protections afforded to the Rated Notes upon the occurrence and continuation of an event of default under the Indenture.
6. Conditions and Limitations
The Final Ratings assigned herein are subject to the following conditions and limitations:
(a) The Final Ratings are based upon information provided to Ridgeline through the Offering Memorandum dated as of August 18, 2023, the Indenture dated as of August 22, 2023, the First Supplemental Indenture dated as of September 8, 2023, the Note Purchase Agreement dated as of September 8, 2023, the Collateral Management Agreement, the Collateral Administration Agreement, and the other related transaction documents provided to Ridgeline on or prior to the date hereof (collectively, the "Transaction Documents"). The Final Ratings have been assigned on the assumption that the executed versions of the Transaction Documents will conform in all material respects to the forms reviewed by Ridgeline.
(b) The Final Ratings are subject to ongoing surveillance by Ridgeline and may be revised upward or downward, placed on credit watch, suspended, or withdrawn at any time at Ridgeline's sole and absolute discretion, without prior notice to the Issuers, the Collateral Manager, the Trustee, the Placement Agents, any noteholder, or any other party. Such revisions may result from changes in the credit quality of the Collateral Pool, structural performance, macroeconomic conditions, changes in Ridgeline's rating criteria or methodology, or any other factors deemed relevant by Ridgeline.
(c) Ridgeline has not verified, and does not undertake to verify, the accuracy or completeness of the information provided to it by the Issuer, the Collateral Manager, the Trustee, Issuer's Counsel, or any other party to the Transaction. Ridgeline has relied upon the representations, warranties, and certifications of the Issuer, the Collateral Manager, and their respective counsel as set forth in the Transaction Documents and in the information provided to Ridgeline in connection with its analysis. Ridgeline assumes no responsibility for the accuracy or completeness of such information.
(d) The Final Ratings address the likelihood of timely payment of interest on each class of Rated Notes on each applicable Payment Date, and the ultimate payment of principal on each class of Rated Notes on or before the Stated Maturity Date (October 15, 2036). The Final Ratings do not address:
(i) the payment of any incentive collateral management fees, subordinated collateral management fees, or any other fees or expenses payable by the Issuer that are subordinated to the Rated Notes in the priority of payments waterfall;
(ii) any residual distributions to the holders of the Subordinated Notes;
(iii) the market value or price volatility of any class of Rated Notes or the Subordinated Notes;
(iv) the suitability of any class of Rated Notes or the Subordinated Notes for any particular investor or class of investors; or
(v) any tax consequences arising from the purchase, ownership, or disposition of any class of Rated Notes or the Subordinated Notes.
(e) The Final Ratings do not constitute, and shall not be deemed to constitute, a recommendation by Ridgeline to purchase, sell, or hold any class of Rated Notes or any other security issued in connection with the Transaction. The Final Ratings should be evaluated independently by each investor and should not be relied upon as the sole basis for any investment decision.
7. Conditions to Closing Compliance
This letter is delivered in satisfaction of the closing condition set forth in Section 2.3(b)(iv) of the Indenture dated as of August 22, 2023 (as supplemented by the First Supplemental Indenture dated as of September 8, 2023), which requires that each Rating Agency (as defined in the Indenture) shall have delivered to the Trustee, on or prior to the Closing Date of September 12, 2023, a letter confirming the assignment of ratings to each class of Rated Notes to be issued on the Closing Date in the amounts and at the spreads set forth in the Indenture and the First Supplemental Indenture.
This letter is also delivered in satisfaction of the corresponding closing condition set forth in Section 6(a)(vii) of the Note Purchase Agreement dated as of September 8, 2023, which requires delivery of a rating confirmation letter from each Rating Agency as a condition precedent to the obligations of the Initial Purchasers (as defined in the Note Purchase Agreement) to purchase the Rated Notes on the Closing Date.
Ridgeline hereby confirms that the issuance of the Rated Notes in the aggregate principal amounts and at the pricing spreads set forth in Sections 2 and 3 of this letter will not, in and of itself, result in the withdrawal, downgrade, or placement on negative watch of any of the Final Ratings assigned herein. This confirmation is limited to the specific circumstances described herein and shall not be construed as a commitment by Ridgeline to maintain the Final Ratings at their current levels for any specified period of time or under any future conditions.
8. Ongoing Surveillance
Ridgeline will provide ongoing surveillance of the Final Ratings assigned to the Rated Notes for so long as any class of Rated Notes remains outstanding. Ongoing surveillance will include, without limitation, periodic review of the credit quality and composition of the Collateral Pool, the results of the O/C tests and I/C tests, the performance of the priority of payments waterfall, and the overall structural performance of the Transaction.
The Issuer and the Collateral Manager have agreed, pursuant to the Engagement Letter and the terms of the Indenture, to provide Ridgeline with periodic reports and data necessary for Ridgeline to conduct its ongoing surveillance, including, without limitation:
(a) quarterly trustee reports prepared by Ironclad Trust Company, N.A., acting in its capacity as Collateral Administrator, within the time periods specified in the Indenture;
(b) monthly surveillance reports prepared by the Collateral Manager, including portfolio stratification data, credit quality migration data, and trading activity summaries;
(c) prompt notice of any event of default, potential event of default, or O/C or I/C test breach under the Indenture;
(d) prompt notice of any material amendment, supplement, or modification to the Indenture or any other Transaction Document; and
(e) such other information as Ridgeline may reasonably request from time to time in connection with its ongoing surveillance of the Transaction.
Ridgeline reserves the right, at its sole and absolute discretion, to adjust, revise, upgrade, downgrade, place on credit watch, suspend, or withdraw any or all of the Final Ratings assigned herein, at any time and without prior notice, based on changes in the credit quality of the Collateral Pool, structural performance of the Transaction, changes in Ridgeline's rating criteria or methodology, or any other factors deemed relevant by Ridgeline in its independent analytical judgment.
9. Confidentiality and Use
This letter is confidential and proprietary to Ridgeline and is provided solely for the use of the addressees named herein and their respective legal counsel, in each case solely in connection with the Driftwood CLO 2023-I Transaction and the issuance, offering, and sale of the Rated Notes and the Subordinated Notes as described herein.
This letter may be included in, or referenced by, the Offering Memorandum and the closing deliverables for the Transaction, including, without limitation, the closing binder to be prepared by Issuer's Counsel. Ridgeline consents to the inclusion of a reference to Ridgeline's ratings in the Offering Memorandum, provided that any such reference accurately reflects the Final Ratings set forth herein and is accompanied by appropriate disclosure, including the disclaimer language required by Ridgeline's standard terms and conditions and the provisions of applicable SEC and NRSRO regulations.
No other use, reproduction, or distribution of this letter, in whole or in part, is authorized without the prior written consent of Ridgeline. Any unauthorized use or distribution of this letter shall constitute a material breach of the Engagement Letter and may give rise to claims by Ridgeline for damages and injunctive relief.
10. Limitation of Liability and Disclaimer
THE FINAL RATINGS ASSIGNED HEREIN ARE EXPRESSIONS OF RIDGELINE'S CURRENT OPINION REGARDING THE CREDITWORTHINESS OF THE RATED NOTES AND ARE NOT STATEMENTS OF FACT. THE FINAL RATINGS DO NOT CONSTITUTE, AND SHALL NOT BE DEEMED TO CONSTITUTE, AN AUDIT, A GUARANTEE OF CREDIT QUALITY, OR A RECOMMENDATION TO PURCHASE, SELL, OR HOLD ANY SECURITY. RIDGELINE DOES NOT AUDIT OR INDEPENDENTLY VERIFY THE INFORMATION PROVIDED BY THE ISSUER, THE COLLATERAL MANAGER, OR THEIR AGENTS, AND ASSUMES NO RESPONSIBILITY FOR THE ACCURACY, COMPLETENESS, OR TIMELINESS OF SUCH INFORMATION.
RIDGELINE'S RATINGS ARE BASED ON INFORMATION AVAILABLE TO RIDGELINE AS OF THE DATE HEREOF AND ARE SUBJECT TO CHANGE, REVISION, SUSPENSION, OR WITHDRAWAL AT ANY TIME AT RIDGELINE'S SOLE DISCRETION AND WITHOUT PRIOR NOTICE. RIDGELINE DOES NOT UNDERTAKE ANY OBLIGATION TO UPDATE, REVISE, OR SUPPLEMENT THIS LETTER OR THE FINAL RATINGS ASSIGNED HEREIN, EXCEPT AS REQUIRED BY APPLICABLE LAW OR REGULATION OR AS RIDGELINE MAY DETERMINE IN ITS SOLE DISCRETION IN CONNECTION WITH ITS ONGOING SURVEILLANCE ACTIVITIES.
IN NO EVENT SHALL RIDGELINE, ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, OR AFFILIATES BE LIABLE TO THE ISSUER, THE CO-ISSUER, THE COLLATERAL MANAGER, THE TRUSTEE, THE PLACEMENT AGENTS, ANY NOTEHOLDER, OR ANY OTHER PERSON OR ENTITY FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATING TO THE FINAL RATINGS ASSIGNED HEREIN, THIS LETTER, OR ANY OTHER INFORMATION OR ANALYSIS PROVIDED BY RIDGELINE IN CONNECTION WITH THE TRANSACTION, REGARDLESS OF WHETHER SUCH LIABILITY ARISES IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY, OR OTHERWISE, AND REGARDLESS OF WHETHER RIDGELINE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
THE FOREGOING LIMITATION OF LIABILITY SHALL APPLY TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW AND SHALL SURVIVE THE TERMINATION OR EXPIRATION OF THE ENGAGEMENT LETTER AND ANY OTHER AGREEMENT BETWEEN RIDGELINE AND THE ISSUER OR ANY OTHER PARTY TO THE TRANSACTION.
This letter shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles.
If you have any questions regarding this letter or the Final Ratings assigned herein, please do not hesitate to contact the undersigned at (212) 438-7240 or kenji.matsuda@ridgelineratings.com.
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Very truly yours,
RIDGELINE CREDIT RATINGS LLC
By: ________
Name: Kenji Matsuda
Title: Director, CLO Ratings
Date: September 8, 2023
Ridgeline Credit Ratings LLC 7 World Trade Center, 30th Floor New York, NY 10007 Telephone: (212) 438-7240
Email: kenji.matsuda@ridgelineratings.com
cc: (via electronic mail)
Driftwood Credit Management LLC 200 Brickell Avenue, Suite 3100 Miami, FL 33131
Attention: David Hwan, Managing Director, Structured Credit
Northbridge Capital Markets Inc. (Co-Placement Agent) 1251 Avenue of the Americas, 34th Floor New York, NY 10020
Attention: Raymond Cho, SVP, Structured Credit Sales
Barrington, Locke & Hayes LLP (Placement Agent's Counsel) 601 Lexington Avenue New York, NY 10022
Attention: Gregory Fontaine, Partner
Ashworth & Pratt LLP (Trustee's Counsel) One Liberty Plaza, 46th Floor New York, NY 10006
Attention: Lillian Marchetti, Partner
Class | CUSIP (144A) | CUSIP (Reg S) | ISIN (144A) | Aggregate Principal Amount | Final Ridgeline Rating
Class A-1 Notes | 26738TAA5 | G2694LAA7 | US26738TAA51 | $256,000,000 | AAA
Class A-2 Notes | 26738TAB3 | — | — | $40,000,000 | AA
Class B Notes | 26738TAC1 | — | — | $28,000,000 | A
Class C Notes | 26738TAD9 | — | — | $24,000,000 | BBB
Class D Notes | 26738TAE7 | — | — | $16,000,000 | BB
Class | Interest Rate | Spread over Reference Rate
Class A-1 Notes | Compounded SOFR + 155 bps | +1.55%
Class A-2 Notes | Compounded SOFR + 190 bps | +1.90%
Class B Notes | Compounded SOFR + 230 bps | +2.30%
Class C Notes | Compounded SOFR + 310 bps | +3.10%
Class D Notes | Compounded SOFR + 625 bps | +6.25%
Class | Subordination Level | Dollar Amount of Credit Enhancement
Class A-1 Notes | 36.00% | $144,000,000
Class A-2 Notes | 26.00% | $104,000,000
Class B Notes | 19.00% | $76,000,000
Class C Notes | 13.00% | $52,000,000
Class D Notes | 9.00% | $36,000,000
O/C Test | Trigger Level
Class A O/C Test | 128.00%
Class B O/C Test | 118.00%
Class C O/C Test | 110.00%
Class D O/C Test | 105.50%
I/C Test | Trigger Level
Class A I/C Test | 120.00%
Class B I/C Test | 115.00%
Class C I/C Test | 110.00%
Class D I/C Test | 105.00%

RIDGELINE CREDIT RATINGS LLC 7 World Trade Center, 30th Floor New York, NY 10007

RIDGELINE CREDIT RATINGS LLC

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