KBRA Affirms the Notes Issued by GCM Grosvenor Diversified Alternatives Issuer LLC

KBRA affirms the outstanding ratings and outlooks assigned to the Class A Notes, Class B Notes and Class C Notes (collectively, the “Notes” or the “Rated Debt”) issued by GCM Grosvenor Diversified Alternatives Issuer LLC (in such capacity, the “Issuer”).

Since the previous review, transaction performance has been generally stable. The outstanding debt balance has remained unchanged, with improvements in the value of underlying collateral contributing to an improvement in the transaction’s overall LTV. The transaction is approaching the end of its investment period in November 2026, after which it will enter its amortization period. KBRA’s decision to affirm the outstanding ratings on the Notes and maintain a Stable outlook considers all the above factors, as well as GCM Grosvenor’s demonstrated ability to continue deploying capital into an underlying portfolio consistent with the quality and characteristics initially projected.

Founded in 1971, GCM Grosvenor is a global alternative asset manager, with nine main global offices worldwide and 181 investment professionals. As of June 30, 2026, the firm managed approximately $97 billion of assets under management (AUM), with investment experience across a range of asset classes and strategies, including private equity, private credit, and infrastructure. GCM Grosvenor has a diverse institutional investor base coupled with a lengthy track record of stable performance and demonstrated capital raising capabilities.

Key Credit Considerations

Asset Coverage 

As of May 2026, asset coverage for the Class A Notes was 215.3% (46.5% LTV), the Class B Notes was 165.6% (60.4% LTV), and the Class C Notes was 143.5% (69.7% LTV). This represents an improvement in asset coverage compared to the prior surveillance review, primarily driven by an increase in the underlying funds’ portfolio NAV. The LTV has also decreased below the maximum LTV ratio threshold of 70.0%, which was breached at the time of the previous surveillance review.

Transaction Structure

The transaction considers key structural features, further described below:

i. LTV Trigger: Investors in the Rated Debt benefit from an LTV Test, that restricts distributions to the Subordinated Noteholders if the applicable LTV threshold is exceeded. The LTV limits the maximum permitted LTV on the Notes to 70.0%. The LTV requirement decreases as per the predetermined schedule through November 2028, after which it remains constant at 60.0%. The LTV is calculated as the aggregate outstanding principal balance of the Liquidity Facility and the Rated Debt divided by the portfolio assets’ NAV.

ii. Amortization Profile: Beginning in 2027, the Rated Debt is subject to a targeted amortization schedule that targets the full repayment of Class A Notes, Class B Notes, and Class C Notes by 2030, 2031 and 2032, respectively. To the extent the available proceeds are insufficient to meet a targeted amortization payment, unpaid amounts will be carried forward to be paid in the following subsequent periods. Distributions to the holders of Subordinated Notes are restricted unless the applicable targeted amortization payment on each class of the Rated Debt has been made. As of August 2026, no amortization has occurred.

iii. Money Market Funds Minimum Balance: The Issuer shall not permit the Money Market Funds Balance to drop below $20 million for a period exceeding 15 consecutive business days, at any point in time. This amount is required to be retained for the Issuer to be able to meet its future obligations, as per the priority of payments. As of June 30, 2026, there is approximately $27.8 million in the Money Market Funds Balance, which remains above the $20 million minimum requirement.

Alignment of Interests 

GCM Grosvenor or its affiliates will invest directly or indirectly in the same portfolio of Drawdown Funds that serve as collateral in the transaction. In addition, GCM Grosvenor and its affiliates have invested a portion of the Subordinated Notes, which further aligns Noteholder outcomes with the Manager.

Uncertain Cash Flow 

While the initial pool of Liquid Products and Money Market Funds provides cash flow for debt service in the early years of the transaction, the payment of timely interest and scheduled principal on the Notes in the latter stages of the transaction depends on realizations from Drawdown Products, which, as alternative investments, do not generate cash flow on a fixed schedule nor in predetermined amounts. This risk is partially mitigated in the transaction through ongoing allocations to cash-yielding Money Market Funds, a Money Markets Minimum Balance equal to or greater than $20 million, and access to a Liquidity Facility. These latter features cover unanticipated liquidity shortfalls before Drawdown Products begin to generate positive cash flow. As of June 2026, the Money Market Minimum Balance is satisfied, and the Liquidity Facility is undrawn. In October 2025, the maturity date of the Liquidity Facility was extended to October 2029.

Quality of Underlying Assets

While the Money Market Funds and the majority of the Liquid Products are more liquid, the Drawdown Products are considered to exhibit greater price volatility, inherent illiquidity, and idiosyncratic risk. As of June 30, 2026, the Grosvenor Institutional Partners (“GIP”) investment, which represented approximately 57% of the Liquid Products, was also considered to exhibit greater price volatility. However, the Issuer fully redeemed its GIP position as of September 30, 2026. On a blended basis over the life of the transaction, KBRA views the expected overall asset quality of the collateral as reflecting the characteristics of both the Liquid and Drawdown Products.

Active Management

GCM Grosvenor is an alternative asset manager, founded in 1971, with a strategy concentrated in separately managed accounts (SMA) for various institutional investors. The Manager has a global presence, with 181 investment professionals headquartered across nine main global offices. As of June 30, 2026, the firm manages approximately $97 billion in assets under management (AUM).

Rating Sensitivities

Underperformance of Fund Collateral 

Deterioration in portfolio valuation which further weakens LTV of the Notes.

Deployment and Realization Pace

A slowdown in the pace of deployments and/or realizations that differs from the Manager’s forecasted expectations and results in a strained liquidity profile.

De-leveraging

De-leveraging of the Notes that decreases LTV by way of Note repayment coupled with stable performance of Drawdown Products.

To access ratings and relevant documents, click here.

Click here to view the report.

Related Publications

Methodology