Feb 10 (The following statement was released by the rating agency)
Fitch Ratings expects to assign the following
ratings and Outlooks to CNH Equipment Trust 2014-A:
--$141,400,000 class A-1 'F1+sf';
--$276,000,000 class A-2 'AAAsf'; Outlook Stable;
--$270,000,000 class A-3 'AAAsf'; Outlook Stable;
--$137,600,000 class A-4 'AAAsf'; Outlook Stable;
--$19,000,000 class B 'Asf'; Outlook Stable
Fitch's stress and rating sensitivity analysis are discussed in the presale
report titled 'CNH Equipment Trust 2014-A', released today. The presale report
details how Fitch addresses the key rating drivers summarized below.
KEY RATING DRIVERS
High AG Concentration: The 2014-A collateral pool consists of 93.29%
agricultural equipment (AG) and 6.71% construction equipment (CO). While the
2014-A AG concentration is consistent with CNH Capital securitizations going
back to 2009, the AG concentrations in all these transactions are significantly
higher relative to CNH Capital transactions issued prior to 2009, which
consisted of approximately 18%?32% CO.
Consistent Collateral Concentrations: The pool contains 47.32% used equipment
and is comparable to the prior transactions, which typically had concentrations
ranging from 46%?50%. Furthermore, the pool consists of 78.11% annual-pay
contracts, which historically have experienced a lower level of losses than
other payment types.
Sufficient Credit Enhancement: Hard credit enhancement (CE) for the 2014-A
transaction is unchanged from the prior six transactions. Class A and class B
hard CE remains at 4.50% and 2.25%, respectively. Expected excess spread of
1.83% (per annum ) is down from 2013-D's 1.92%.
Quality Origination, Underwriting, and Servicing: CNH Capital has demonstrated
adequate abilities as originator, underwriter and servicer, as evidenced by
historical delinquency and loss performance of securitized trusts and the
Integrity of Legal Structure: The legal structure of the transaction should
provide that a bankruptcy of the trust would not impair the timeliness of
payments on the securities.
Unanticipated increases in the frequency of defaults and loss severity on
defaulted receivables could produce loss levels higher than the base case and
could result in potential rating actions on the notes. Fitch evaluated the
sensitivity of the ratings to increased losses over the life of the transaction.
Fitch's analysis found that the notes display limited sensitivity to increased
defaults and losses, showing limited impact on the rating of the notes under
Fitch's moderate (1.5x base case loss) scenario. The notes could experience
downgrades of at least two rating category under Fitch's severe (2.5x base case
Key Rating Drivers and Rating Sensitivities are further described in the
accompanying presale report, available at 'www.fitchratings.com' or by clicking
on the above link.
Fitch's analysis of the Representations and Warranties (R&W) of this transaction
can be found in 'CNH Equipment Trust 2014-A - Appendix'. These R&Ws are compared
to those of typical R&W for the asset class as detailed in the special report
'Representations, Warranties, and Enforcement Mechanisms in Global Structured
Finance Transactions' dated April 17, 2012.
Link to Fitch Ratings' Report: CNH Equipment Trust 2014-A (US ABS)