NEW YORK--(BUSINESS WIRE)--As part of its ongoing surveillance, Fitch Ratings affirms three and upgrades three classes from the Ally Auto Receivables Trust (AART) 2013-1 transaction as follows:
--Class A-2 affirmed at 'AAAsf'; Outlook Stable;
--Class A-3 affirmed at 'AAAsf'; Outlook Stable;
--Class A-4 affirmed at 'AAAsf'; Outlook Stable;
--Class B upgraded to 'AAAsf' from 'AAsf'; Outlook Stable;
--Class C upgraded to 'AAsf' from 'Asf'; Outlook revised to Positive from Stable;
--Class D upgraded to 'Asf' from 'BBBsf'; Outlook revised to Positive from Stable.
KEY RATING DRIVERS
The rating affirmations are based on available credit enhancement and loss performance to date. The collateral pool is performing within Fitch's expectations with losses to date well under Fitch's initial projections.
The upgrades to the class B, C, and D notes reflect strong performance in cash flow modeling and coverage well in excess of the requirement for each rating level. Although loss coverage for the subordinate notes is strong enough to support multiple level upgrades, Fitch is only recommending one level upgrades due to the sequential nature of this structure and the limited amortization to date.
However, due to the strong performance to date and ongoing loss coverage levels and multiples, Fitch will review this transaction in six to eight months for further review.
The ratings reflect the quality of Ally Financial Inc.'s (Ally) retail auto loan originations, the sound financial and legal structure of the transaction, and the strength of the servicing provided by Ally.
Unanticipated increases in the frequency of defaults and loss severity could produce loss levels higher than the current projected base case loss proxies and impact available loss coverage and multiples levels for the transactions. Lower loss coverage could impact the ratings and outlooks depending on the extent of the decline in coverage.
In Fitch's initial review of the transactions, the notes were found to have limited sensitivity to a 1.5x and 2.5x increase of Fitch's base case loss expectations. To date, the transactions have exhibited strong performance with losses well within Fitch's initial expectations with rising loss coverage and multiple levels. As such, a material deterioration in performance would have to occur within the asset pools to have potential negative impact on the outstanding ratings.
Fitch's analysis of the Representation and Warranties (R&W) of this transaction can be found in the report titled, 'Ally Auto Receivables Trust 2013-1 - Appendix'. The R&W were compared to those of typical R&W for the asset class as detailed in the special report 'Representations, Warranties, and Enforcement Mechanisms in the Global Structured Finance Transactions' dated Apr. 17, 2012.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and related research:
--'Rating Criteria for U.S. Auto Loan ABS' (Apr. 10, 2013);
--'Global Structured Finance Rating Criteria' (May 24, 2013);
--'Representations, Warranties, and Enforcement Mechanisms in the Global Structured Finance Transactions' (Apr. 17, 2012);
--'Ally Auto Receivables Trust 2013-1 -- Appendix' (Mar. 28, 2013).
Applicable Criteria and Related Research:
Rating Criteria for U.S. Auto Loan ABS
Global Structured Finance Rating Criteria
Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions -- Amended
Ally Auto Receivables Trust 2013-1 -- Appendix