RPT-Fitch to Rate Ford Credit Auto Lease Trust 2013-B; Issues Presale
Oct 21 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings expects to assign the following ratings and Rating Outlooks to Ford Credit Auto Lease Trust 2013-B:
--$177,000,000 class A-1 'F1+sf';
--$101,000,000 class A-2A 'AAAsf'; Outlook Stable;
--$303,000,000 class A-2B 'AAAsf'; Outlook Stable;
--$250,000,000 class A-3 'AAAsf'; Outlook Stable;
--$78,190,000 class A-4 'AAAsf'; Outlook Stable;
--$51,080,000 class B 'AAsf'; Outlook Stable;
--$47,670,000 class C 'Asf'; Outlook Stable.
Key Rating Drivers
Strong Credit Quality: Credit quality for the pool is consistent with recent pools. The weighted average (WA) Fair Isaac Corp. (FICO) score is 746 and WA original term is 33 months, with 17.96% of the leases having terms of more than 36 months. The pool is geographically diverse, has nine months seasoning and consists of 100% new vehicles.
Adequate Structural Protection: 2013-B is a sequential-pay structure. Initial hard credit enhancement for the class A, B, and C notes total 20.40%, 15.90%, and 11.70%, respectively. An increase from 2013-A due to including a class A-2B note and Fitch's interest rate stresses applied.
Consistent Lease Maturities: 2013-B has a WA original term of 33 months and fewer longer-term leases than 2012-A. The largest 12-month residual maturity period totals 49.04% of the total RV. Fitch accounted for this RV maturity risk by applying a twelve-month stressed loss average to derive the RV loss proxy and applied adjustments to the weightings of the RV haircuts.
State of the Wholesale Vehicle Market: The U.S. wholesale vehicle market has remained healthy thus far in 2013. However, Fitch remains cautious that general economic softness and expected growing used vehicle supply could have a negative impact on future residual realizations.
Stable Corporate Health: Fitch currently rates the long-term issuer default rating (IDR) of Ford, the parent of Ford Credit, and Ford Credit 'BBB?' with a Stable Rating Outlook.
Consistent Origination/Underwriting/Servicing: Ford Credit demonstrates good capabilities as originator, underwriter, and servicer, as evidenced by historical delinquency, credit, and residual value loss performance of its managed portfolio and securitizations. Fitch deems Ford Credit capable of adequately servicing 2013-B.
Legal Structure Integrity: The legal structure of the transaction should provide that a bankruptcy of Ford Credit would not impair the timeliness of payments on the securities.
Unanticipated decreases in the value of returned vehicles and/or increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than the base case. This in turn could result in potential negative rating actions on the notes. Fitch evaluated the sensitivity of the ratings assigned to FCALT 2013-B to increased credit and residual losses over the life of the transaction.
Fitch's analysis found that the transaction displays some sensitivity to increased defaults and credit losses, showing downgrades of one rating category under Fitch's 1.5x base case loss scenario, while experiencing downgrades of one or two rating categories under Fitch's severe (2.5x base case loss) scenario. The transaction shows significantly more sensitivity to residual loss volatility. Under its severe residual loss scenario, Fitch would expect to downgrade all classes of notes by two or more rating categories.
Key rating drivers and rating sensitivities are further detailed in Fitch's presale report, available at 'www.fitchratings.com' or by clicking on the below link.
Link to Fitch Ratings' Report: Ford Credit Auto Lease Trust 2013-B (US ABS)
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