TEXT-Fitch expects to rate Santander Drive Auto Receivables Trust 2012-4
June 25 - Fitch Ratings expects to rate Santander Drive Auto Receivables Trust 2012-4 as follows:
--$281,000,000 class A-1 notes 'F1+sf';
--$398,660,000 class A-2 notes 'AAAsf'; Outlook Stable;
--$237,850,000 class A-3 notes 'AAAsf'; Outlook Stable;
--$150,290,000 class B notes 'AAsf'; Outlook Stable;
--$189,830,000 class C notes 'Asf'; Outlook Stable;
--$142,370,000 class D notes 'BBBsf'; Outlook Stable;
--$47,460,000 class E notes 'BBsf'; Outlook Stable.
Fitch's stress and rating sensitivity analysis are discussed in the presale report titled 'Santander Drive Auto Receivables Trust 2012-4', dated June 25, 2012, which is available at 'www.fitchratings.com'.
Key Rating Drivers:
Consistent Credit Quality: The credit quality of 2012-4 is representative of the subprime market and is comparatively better than 2012-3 (not rated by Fitch). The weighted average (WA) Fair Isaac Corp. (FICO) score is 589, and the WA internal loss forecasting score (LFS) is 584. Used vehicles total 71.2%, and the WA loan-to-value (LTV) ratio is 113%, consistent with prior transactions.
Consistent Credit Enhancement Structure: The cash flow distribution is a sequential-pay structure, consistent with prior transactions. Initial hard credit enhancement (CE) is 44% for the class A notes. The reserve totals 2% (non-declining), and initial overcollateralization (OC) is 8.50% (both of the initial pool balance), growing to a target of 15% (of the current pool balance).
Stable Portfolio/Securitization Performance: Despite weaker 2011 vintage performance, losses on SCUSA's portfolio and 2010-2011 SDART securitizations declined from prior years, supported by the economic rebound and strong used vehicle values supporting higher recovery rates.
Stable Corporate Health: SCUSA recorded solid financial results in 2011 and early 2012 and has been profitable since 2007. Fitch rates Santander, the majority owner of SCUSA, 'BBB+/F2' with a Negative Rating Outlook.
Consistent Origination/Underwriting/Servicing: SCUSA demonstrates adequate abilities as originator, underwriter, and servicer, evidenced by historical portfolio delinquency, loss experience, and securitization performance. Fitch deems SCUSA capable to service 2012-4.
Legal Structure Integrity: The legal structure of the transaction should provide that a bankruptcy of SCUSA would not impair the timeliness of payments on the securities.
Link to Fitch Ratings' Report: Santander Drive Auto Receivables Trust 2012-4 (US ABS)