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
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
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
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
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.