NEW YORK--(BUSINESS WIRE)--As part of its ongoing surveillance, Fitch Ratings has taken the following rating actions on the Santander Drive Auto Receivables Trust 2012-4 transaction:
--Class A-3 affirmed at 'AAAsf'; Outlook Stable;
--Class B upgraded to 'AAAsf' from 'AAsf; Outlook Stable;
--Class C upgraded to 'AAsf' from 'Asf'; Outlook to Positive from Stable;
--Class D at 'BBBsf'; Rating Watch Positive from Outlook Stable;
--Class E affirmed at 'BBsf'; Outlook Stable.
KEY RATING DRIVERS
The rating actions are based on available credit enhancement and loss performance. The collateral pool continues to perform within Fitch's expectations. Under the credit enhancement structure, the securities are able to withstand stress scenarios consistent with the current rating and make full payments to investors in accordance with the terms of the documents.
Fitch's review is based on the initial base case cumulative net loss (CNL) estimate of 15.80%. However, based on current loss trends, Fitch projects CNL for this pool to be in the 14.20% range.
Under Fitch's base recommended cash flow modeling scenario, class B and C meet the threshold for a single-category upgrade. Placing class D on Rating Watch Positive reflects Fitch's expectation that this note will likely be eligible for a single-category upgrade given additional amortization over the next six months. Further, Fitch will continue to monitor the transaction and may take additional rating actions within this timeframe.
The ratings reflect the quality of Santander Consumer USA, Inc.'s retail auto loan originations, the adequacy of its servicing capabilities, and the sound financial and legal structure of the transaction.
Unanticipated increases in the frequency of defaults and loss severity could produce loss levels higher than the current projected base case loss proxy and impact available loss coverage and multiples levels for the transaction. Lower loss coverage could impact ratings and Rating Outlooks, depending on the extent of the decline in coverage.
In this review of the transaction, class A, B and C demonstrate limited sensitivity to various loss-timing scenarios. Classes D and E show muted growth in their respective rating loss multiples under a back-ended loss timing scenario.
To date, the transaction has exhibited strong performance with losses within Fitch's initial expectations, with rising loss coverage and multiple levels consistent with the current ratings. A material deterioration in performance would have to occur within the asset pool 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 Santander Drive Auto Receivables Trust 2012-4 -- Appendix. These R&W are 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.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and related research:
--'Rating Criteria for U.S. Auto Loan ABS' (April 7, 2014);
--'Global Structured Finance Rating Criteria' (May 24, 2013).
--'Santander Drive Auto Receivables Trust 2012-4 - Appendix' (January 30, 2014)
Applicable Criteria and Related Research:
Santander Drive Auto Receivables Trust 2012-4 -- Appendix
Global Structured Finance Rating Criteria
Rating Criteria for U.S. Auto Loan ABS