March 10 (The following statement was released by the rating agency)
Fitch Ratings expects to assign the following ratings and Rating Outlooks to the notes
issued by Hyundai Auto Lease Securitization Trust 2014-A:
--Class A-1 asset-backed notes 'F1+sf';
--Class A-2 asset-backed notes 'AAAsf'; Outlook Stable;
--Class A-3 asset-backed notes 'AAAsf'; Outlook Stable;
--Class A-4 asset-backed notes 'AAAsf'; Outlook Stable;
--Class B asset-backed notes 'AAsf'; Outlook Stable.
KEY RATING DRIVERS
Stable Collateral Quality: The pool is consistent with that of 2013-B, with a
strong weighted average (WA) Fair Isaac Corp. (FICO) score of 748 and seasoning
of 11 months. Additionally, securitized residuals as a percent of the
securitization value have increased to 70.7%. The pool has shifted to the lower
credit tier; however the credit composition (i.e. FICO scores) of those
borrowers has improved from prior vintages.
Aggressive Sales and Lease Portfolio Growth: Due to sales and lease origination
growth in recent years, there could be a large increase in the supply of used
Hyundai and Kia vehicles available for sale at auction in the coming years.
Fitch has accounted for this in its residual loss analysis, as growth in used
vehicle volume could impact residual values.
Adequate Credit Enhancement Structure: Initial hard credit enhancement (CE) will
be 16.95% and 13.50% for class A and B notes, respectively, growing to 18.95%
and 15.50% of the initial securitization value (SV). Initial excess spread is
expected to be 4.74%.
Stable Loss Performance: Credit and residual losses on HCA's portfolio continue
to decline significantly from the elevated levels seen in 2008 and 2009. This is
a result of strong obligor credit quality and a solid wholesale used vehicle
market, leading to higher recovery rates and residual realizations.
Evolving Wholesale Market: The U.S. wholesale vehicle market has remained strong
in recent years. However, increasing off-lease vehicle supply and pressure from
increased production levels could lead to decreased residual realizations during
the life of the transaction.
Stable Origination/Underwriting/Servicing: Fitch believes HCA to be a capable
originator, underwriter and servicer, as evidenced by its historical managed
portfolio delinquency and loss experience, as well as securitization
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 scenario would likely result
in declines of credit enhancement and loss coverage levels available to the
notes. As such, Fitch conducts sensitivity analyses by increasing the
transaction's initial base case RV and credit loss assumptions and examining the
rating implications on all classes of issued notes. The increases to the base
case losses are applied such that they represent moderate (1.5x) and severe
(2.5X) stresses, respectively. They are intended to provide an indication of the
rating sensitivity of notes to unexpected deterioration of a trust's
The presale report is available at 'www.fitchratings.com' or by clicking on the
Link to Fitch Ratings' Report: Hyundai Auto Lease Securitization Trust 2014-A