March 4 (The following statement was released by the rating agency)
Fitch Ratings expects to rate Enterprise Fleet Financing LLC, series 2013-1 as follows:
--$193,000,000 class A-1 notes 'F1+sf';
--$394,000,000 class A-2 notes 'AAAsf'; Outlook Stable;
--$113,200,000 class A-3 notes 'AAAsf'; Outlook Stable.
Fitch's stress and rating sensitivity analysis are discussed in the presale report titled 'Enterprise Fleet Financing LLC, Series 2013-1', dated March 4, 2013, which is available on Fitch's web site. The presale report details how Fitch addresses the key rating drivers which are summarized below.
Key Rating Drivers:
Strong Credit Quality Obligors: Although substantially all of the collateral pool consists of obligors not rated by any Nationally Recognized Statistical Rating Organization (NRSRO), EFM's portfolio has experienced minimal delinquencies and net losses. In its analysis, Fitch conservatively assumed a 'B' rating for all obligors.
Strong Portfolio Diversification: Obligor concentrations have increased slightly relative to the EFF 2012-2 transaction. The top 20 obligors by lease balance represent 7.04%, compared with 7.41% in 2012-2. Industry and vehicle concentrations are consistent with prior transactions, while closed-end lease concentration has decreased.
Minimal Residual Risk: Approximately 96% of the 2013-1 leases are open-end, meaning the lessees bear the residual risk. The remaining approximately 4% are closed-end leases, whereby EFM bears the residual risk. Therefore, the trust has limited exposure to closed-end residual risk and is only exposed to wholesale market risk in the event of an obligor default on the open-end portion of the portfolio.
Sufficient Credit Enhancement: Hard credit enhancement (CE) has decreased from the 2012-2 transaction. Total proposed CE is sufficient to support Fitch's stressed default and loss assumptions, consistent with the expected ratings of 'F1+sf/AAAsf'.
Low Delinquency and Loss History: EFM's historical managed portfolio and prior transaction delinquency and loss experience is low, even during periods marked by elevated levels in other consumer and commercial asset classes due to a weak economy.
Quality Origination, Underwriting, and Servicing Platform: EFM has demonstrated strong capabilities as originator, underwriter, and servicer, as evidenced by historical delinquency and loss performance of securitized trusts and the managed portfolio.
Unanticipated increases in the frequency of defaults could produce default levels higher than the projected base case default proxy and impact available default coverage and multiples levels. Lower default coverage could impact ratings and Rating Outlooks, depending on the extent of the decline in coverage. In Fitch's initial review of the transaction, the notes were found to have limited sensitivity to changes in obligor credit profiles and recovery rates associated with the high concentration of truck collateral in the pool. A material deterioration in performance would have to occur within the asset pool to have potential negative impact on the outstanding ratings.