NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns the following ratings to the Ford Credit Auto Lease Trust 2014-A notes:
--$230,000,000 class A-1 'F1+sf';
--$132,000,000 class A-2A 'AAAsf'; Outlook Stable;
--$393,000,000 class A-2B 'AAAsf'; Outlook Stable;
--$375,000,000 class A-3 'AAAsf'; Outlook Stable;
--$120,000,000 class A-4 'AAAsf'; Outlook Stable;
--$70,290,000 class B 'AAsf'; Outlook Stable;
--$65,550,000 class C 'Asf'; Outlook Stable.
Key Rating Drivers
Strong Credit Quality: Credit quality for the pool is consistent with that of recent pools. The weighted average (WA) Fair Isaac Corp. score is 745 and WA original term is 33.2 months; 81.44% of the pool consists of leases with terms of 36 months or less. The pool is geographically diverse with approximately nine months seasoning, and comprises 100% new vehicles.
Adequate Credit Enhancement Structure: 2014-A is a sequential-pay structure. Initial hard credit enhancement for the class A, B, and C notes totals 20.40%, 15.90%, and 11.70%, respectively, consistent with 2013-B.
Consistent Lease Maturities: 2014-A consists of 73.45% undiscounted base residual value (RV), in line with prior pools. The residual lease maturities are well distributed, with a highest single-month period in December 2015 accounting for 6.28% and 54.01% of the pool maturing within two years from the transaction's close.
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 Corporate Health: Fitch currently rates Ford's (the parent of Ford Credit) and Ford Credit's long-term IDR 'BBB-' with a Stable Outlook.
Consistent Origination/Underwriting/Servicing: Ford Credit demonstrates good capabilities as originator, underwriter, and servicer. This is evidenced by historical delinquency, credit, and residual value loss performance of its managed portfolio and securitizations. Fitch deems Ford Credit capable of adequately servicing 2014-A.
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 and could result in potential rating actions on the notes. Fitch's analysis found that the transaction displays some sensitivity to increased defaults and credit losses, showing downgrades of one notch under Fitch's 1.5x base case loss scenario, while experiencing downgrades of at least one rating category under Fitch's severe (2.5x base case loss) scenario. The transaction shows significantly more sensitivity to residual loss volatility; under Fitch's severe residual loss scenario, all classes of notes would be expected to be downgraded by three or more rating categories.
Key Rating Drivers and Rating Sensitivities are further described in the presale report dated March 17, 2014. Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'Ford Credit Auto Lease Trust 2014-A - Appendix'. This R&W is 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.
The presale report is available to all investors on Fitch's website at www.fitchratings.com. For more information about Fitch's comprehensive subscription service FitchResearch, which includes all presale reports, surveillance, and credit reports on more than 20 asset classes, contact product sales at +1-212-908-0800 or at email@example.com.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 2013);
--'Criteria for Rating U.S. Auto Lease ABS' (April 2013);
--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 2013);
--'Criteria for Servicing Continuity Risk in Structured Finance' (July 2013);
--'Structured Finance Tranche Thickness Metrics'(July 2011);
--'Criteria for Interest Rate Stresses in Structured Finance Transactions' (January 2013);
--'Ford Credit Auto Lease Trust 2014-A - Appendix' (March 2014).