CHICAGO--(BUSINESS WIRE)--Fitch Ratings expects to rate GE Dealer Floorplan Master Note Trust (GE DFMNT) series 2014-1 as follows:
--$500,000,000 class A notes 'AAAsf'; Outlook Stable;
--$10,526,316 class B notes 'Asf'; Outlook Stable;
--$15,789,474 class C notes 'BBBsf'; Outlook Stable.
KEY RATING DRIVERS
Diversified Trust: The trust currently comprises receivables associated with approximately 1,750 manufacturers, 25,000 dealers and 13 separate product lines. GE DFMNT is classified as a category A trust under Fitch's criteria.
Strong Performance: GE DFMNT has experienced minimal net losses going back to 2004. The monthly trust default rate was 0.11% in June 2014. Monthly payment rates (MPR), agings and delinquencies are currently stable, having steadily improved in the past couple years.
Improved Industry, Manufacturer and Dealer Health: Although certain industries/product lines have been slow to recover and some remain weak with volatile monthly losses, the overall strength of the manufacturers and dealers in the trust has stabilized. Trust performance metrics (MPR and losses) are currently stable at historical levels.
Sufficient Credit Enhancement: Initial available credit enhancement for the class A notes is 11.90%, consisting of 9.52% subordination, and a 2.38% reserve (based on the initial collateral balance). The master trust contains a dynamic seasonal early amortization three-month average MPR trigger and a default rate trigger set at 5.0% (on a three-month average).
Consistent Origination and Servicing: GE Commercial Distribution Finance Corporation (GE CDF) has demonstrated adequate abilities as an originator, underwriter, and servicer, as evidenced by the historical delinquency and loss performance of GE DFMNT.
Legal Structure Integrity: The legal structure of the transaction provides that a bankruptcy of General Electric Capital Corporation (GECC) would not impair the timeliness of payments on the securities.
To conduct rating sensitivity for the issued notes, under a category A DFP platform, Fitch assumes portfolio default levels at 5%, 15%, and 25% and under two recovery level scenarios of 50% and 30%. Fitch modeled 2014-1 with the assumption that the above defaults have occurred, reflecting asset performance in a stressed environment. Remaining expected loss levels were compared with the stressed loss assumption grid commensurate with various rating levels.
Key Rating Drivers and Rating Sensitivities are further described in the accompanying presale report.
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'.
Fitch's analysis of the Representation and Warranties (R&W) of this transaction can be found in 'GE Dealer Floorplan Master Note Trust, Series 2014-1--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 the Global Structured Finance Transactions' dated April 17, 2012.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Rating Criteria for Dealer Floorplan ABS' (Jan. 13, 2014);
--'Global Structured Finance Rating Criteria' (May 20, 2014);
--'GE Dealer Floorplan Master Note Trust, Series 2014-1' (July 14, 2014);
--'GE Dealer Floorplan Master Note Trust, Series 2014-1-- Appendix' (July 14, 2014).
Applicable Criteria and Related Research: GE Dealer Floorplan Master Note Trust, Series 2014-1 (US ABS)
Global Rating Criteria for Dealer Floorplan ABS
Global Structured Finance Rating Criteria