Fitch Rates BMW Vehicle Lease Trust 2014-1

NEW YORK--()--Fitch Ratings has assigned the following ratings and Rating Outlooks to the notes issued by BMW Vehicle Lease Trust 2014-1:

--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.

Key Rating Drivers

Stable Collateral Quality: The pool is consistent with that of the 2013-1 transaction, with a strong WA FICO score of 765 and seasoning of 10 months. While the securitized residual has increased to 71.11%, model concentrations have decreased with the top model making up 28.3% of the pool.

Adequate CE Structure: Initial CE has decreased by 0.50% from 2013-1 and will be 16.75%, growing to 19.00% of the initial securitization value. Initial excess spread is 4.82%. Loss coverage remains adequate to support Fitch's 'AAAsf' stressed assumptions.

Strong Credit and Normalizing Residual Performance: Credit losses on BMW Financial Services' (BMW FS) portfolio have decreased from the elevated levels seen in 2008 and 2009 due to strong obligor credit quality. In addition, the portfolio is displaying a decrease in residual gains from prior years due to the stabilization in the wholesale used vehicle market which has lowered residual realizations. Fitch's base case credit net loss proxy is 0.90%, and adjusted residual value loss proxy is 14.40%.

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 realization during the life of the transaction.

Legal Structure Integrity: The legal structure of the transaction should provide that a bankruptcy of BMW FS would not impair the timeliness of payments on the securities.

Stable Origination/Underwriting/Servicing: BMW FS demonstrates adequate abilities as originator, underwriter, and servicer, as evidenced by historical portfolio delinquency and loss experience and securitization performance.

Rating Sensitivity

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 would likely result in declines of credit enhancement and loss coverage levels available to the notes. Hence, 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, and are intended to provide an indication of the rating sensitivity of notes to unexpected deterioration of a trust's performance.

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 'webmaster@fitchratings.com'.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria', May 24, 2013;

--'Criteria for Rating U.S. Auto Lease ABS', April 30, 2013;

--'Counterparty Criteria for Structured Finance Transactions, May 30, 2012;

--'Structured Finance Tranche Thickness Metrics', July 29, 2011.

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

Criteria for Rating U.S. Auto Lease ABS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=706699

Counterparty Criteria for Structured Finance Transactions — Effective 12 March 2012 to 20 May 2012

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=667929

Counterparty Criteria for Structured Finance and Covered Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=707155

Structured Finance Tranche Thickness Metrics

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=646951

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=827122

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Autumn Mascio, +1 212-908-0896
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Timothy McNally, +1 212-908-0870
Analyst
or
Committee Chairperson
Bradley Sohl, +1 212-908-0792
Senior Director
or
Media Relations, New York
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com

Sharing

Contacts

Fitch Ratings
Primary Analyst
Autumn Mascio, +1 212-908-0896
Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Timothy McNally, +1 212-908-0870
Analyst
or
Committee Chairperson
Bradley Sohl, +1 212-908-0792
Senior Director
or
Media Relations, New York
Alyssa Castelli, +1 212-908-0540
alyssa.castelli@fitchratings.com