(Repeat for additional subscribers)
June 16 (The following statement was released by the rating agency)
Fitch Ratings expects to assign the following ratings
and Outlooks to the notes issued by Ford Credit Auto Owner Trust 2014-B:
--$394,100,000 class A-1 'F1+sf';
--$538,700,000 class A-2 'AAAsf'; Outlook Stable;
--$464,500,000 class A-3 'AAAsf'; Outlook Stable;
--$102,440,000 class A-4 'AAAsf'; Outlook Stable;
--$47,360,000 class B 'AAsf'; Outlook Stable;
--$31,570,000 class C 'Asf'; Outlook Stable;
--$31,570,000 class D 'NRsf'.
KEY RATING DRIVERS
Stable Credit Quality: The 2013-D pool is consistent with prior deals, with a WA
FICO score of 726, and new vehicle contracts total 87.37%. The pool is
geographically diverse with seven months of seasoning, while 41.37% of the pool
consists of loans with terms of more than 60 months.
Adequate Credit Enhancement Structure: The cash flow distribution is a
sequential-pay structure, consistent with prior transactions. Initial hard
credit enhancement (CE) for the class A notes totals 5.50%, consisting of 7%
subordination and a 0.50% nondeclining reserve offset by under-collateralization
of 2% on an adjusted pool basis.
Stable Portfolio/Securitization Performance: Delinquencies and losses on Ford
Credit's portfolio and 2009-2012 FCAOT securitizations are currently at low
levels, supported by the improving (albeit volatile) U.S. economy, and healthy
used vehicle values resulting in higher recovery rates.
Positive Corporate Performance: Fitch currently rates the long-term IDR of Ford
Motor Company (Ford), the parent of Ford Credit, and Ford Credit 'BBB-' with a
Stable Rating Outlook.
Unstable Economic Outlook: A slower recovery and potential for volatility could
affect delinquencies and losses. Fitch's analysis accounts for this risk by
including poorer performing vintages from the recent recession in the base case
Consistent Origination/Underwriting/Servicing: Ford Credit demonstrates adequate
abilities as originator, underwriter and servicer, as evidenced by historical
portfolio and securitizations' delinquency and loss performance. Fitch deems
Ford Credit an adequate servicer to service 2013-D.
Integrity of Legal Structure: 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 increases in the frequency of defaults and loss severity on
defaulted receivables could produce loss levels higher than the base case. This
could result in potential rating actions on the notes. Fitch evaluated the
sensitivity of the ratings assigned to all classes of Ford Credit Auto Owner
Trust 2014-B to increased losses over the life of the transaction. Fitch's
analysis found that the class B, and C notes display some sensitivity to
increased defaults and losses, showing potential downgrades of up to one
category under Fitch's moderate (1.5x base case loss) scenario. All classes of
notes could experience downgrades of up to two rating categories under Fitch's
severe (2.5x base case loss) scenario.
Key Rating Drivers and Rating Sensitivities are further detailed in the
accompanying presale report, available at 'www.fitchratings.com' or by clicking
on the below link.
Link to Fitch Ratings' Report: Ford Credit Auto Owner Trust 2014-B (US ABS)