Fitch to Rate GE Equipment Midticket LLC 2014-1; Issues Presale

NEW YORK--()--Link to Fitch Ratings' Report: GE Equipment Midticket LLC, Series 2014-1 (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=770588

Fitch Ratings expects to assign the following ratings and Rating Outlooks to GE Equipment Midticket LLC, series 2014-1:

--$138,600,000 class A-1 notes 'F1+sf';

--$190,000,000 class A-2 notes 'AAAsf'; Outlook Stable;

--$173,000,000 class A-3 notes 'AAAsf'; Outlook Stable;

--$77,500,000 class A-4 notes 'AAAsf'; Outlook Stable;

--$10,000,000 class B notes 'AAsf'; Outlook Stable.

KEY RATING DRIVERS

Shifting Collateral Characteristics: VFS receivables make up 30% down from 47% in 2013-1, which is off-set by the inclusion of 15% in HFS receivables. The concentration of Core receivables is slightly higher in 2014-1 at 55% compared to 53% in 2013-1. This shift in collateral is considered a positive given the stronger performance of Core and HFS collateral relative to VFS collateral.

Improved Managed Portfolio Performance: Although GECC's historical managed portfolio loss performance has been volatile, losses have remained low for all business units in recent years. Term securitizations have performed within Fitch's expectations.

Increased Obligor Concentrations: Obligor concentrations have increased in the two most recent GEEMT transactions. As a result, the obligor concentration analysis is the primary rating methodology for the 2014-1 transaction, consistent with 2013-1. The top 20 obligors represent 25%, up from 24% in 2013-1.

Sufficient Credit Enhancement: Initial hard credit enhancement (CE) for 2014-1 is up from 2013-1 and the proposed levels are sufficient to support the default of the Top 20 and 17 obligors, consistent with the expected ratings of 'AAAsf' and 'AAsf'. Additionally, while not the primary methodology, the structure is able to support loss multiples consistent with 'AAAsf' and 'AAsf' ratings.

Quality Origination, Underwriting, and Servicing Platform: GECC has demonstrated adequate abilities as originator, underwriter, and servicer, as evidenced by historical delinquency and loss performance of securitized trusts and the managed portfolio.

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

RATING SENSITIVITIES

Unanticipated increases in the frequency of defaults and loss severity on defaulted receivables could produce CNL levels higher than the base case. This would likely result in declines of CE and remaining loss coverage levels available to the notes. Decreased credit enhancement may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage.

The similar negative impact on loss coverage can also be expected from a lower than expected residual realization rate on the leases. Hence, Fitch conducts sensitivity analysis by eliminating any residual realization benefits and stressing a transaction's initial base case CNL assumption by 1.5x, as well as examining the rating implications on all classes of issued notes. The elimination of residual realization benefits and the 1.5x increase of the base case CNL represent moderate and severe stresses, respectively, and are intended to provide an indication of the rating sensitivity of notes to unexpected deterioration of a trust's performance.

Additional information is available in Fitch's presale report, published today and available at 'www.fitchratings.com' or by clicking on the above link.

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

Applicable Criteria and Related Research:

--'Criteria for Rating U.S. Equipment Lease and Loan ABS' (December 2013);

--'Global Structured Finance Rating Criteria' (August 2014);

--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 2014).

Applicable Criteria and Related Research:

Criteria for Rating U.S. Equipment Lease and Loan ABS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=726362

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

Counterparty Criteria for Structured Finance and Covered Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=866935

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Contacts

Fitch Ratings
Primary Analyst
Joyce Fargas
Director
+1-212-908-0824
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Secondary Analyst
John Alberici
Associate Director
+1- 212-908-0370
or
Committee Chairperson
Bradley Sohl
Senior Director
+1-212-908-0792
or
Media Relations:
Sandro Scenga, +1 212-908-0278 (New York)
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Joyce Fargas
Director
+1-212-908-0824
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Secondary Analyst
John Alberici
Associate Director
+1- 212-908-0370
or
Committee Chairperson
Bradley Sohl
Senior Director
+1-212-908-0792
or
Media Relations:
Sandro Scenga, +1 212-908-0278 (New York)
sandro.scenga@fitchratings.com