Fitch to Rate BMW Vehicle Owner Trust 2014-A; Issues Presale

NEW YORK--()--Link to Fitch Ratings' Report: BMW Vehicle Owner Trust 2014-A (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=788048

Fitch Ratings expects to assign the following ratings and Rating Outlooks to the notes issued by BMW Vehicle Owner Trust (BMWOT) 2014-A:

--$182,600,000 class A-1 'F1+sf';

--$237,000,000 class A-2 'AAAsf'; Outlook Stable;

--$239,000,000 class A-3 'AAAsf'; Outlook Stable;

--$91,400,000 class A-4 'AAAsf'; Outlook Stable.

KEY RATING DRIVERS

Strong Collateral Quality: The weighted average (WA) Fair Isaac Corp. (FICO) score of 759 is consistent with prior BMWOT transactions and indicates a strong borrower. However, extended-term contracts and certified pre-owned (CPO) collateral have increased from the prior transaction.

Sufficient Credit Enhancement: 2014-A incorporates a sequential-pay structure. Total initial hard credit enhancement (CE) in 2014-A for class A notes is 2.75% (overcollateralization of 2.50% plus a 0.25% initial reserve). Yield supplement overcollateralization (OC) will be used to boost the transaction's APR, providing expected excess spread of 2.53%. CE is sufficient to cover Fitch's 'AAAsf' stressed loss expectation.

Strong Portfolio/Securitization Performance: Recently, BMWFS' securitizations and serviced portfolio have experienced improved loss performance.

Evolving Wholesale Market: The U.S. wholesale vehicle market is normalizing following strong performance in recent years. Fitch expects increasing used vehicle supply from off-lease vehicles and trade-ins to pressure ABS recovery rates leading to moderately higher loss rates. Fitch's analysis accounts for this risk by including periods of weak wholesale vehicle market performance in the derivation of its base case loss expectation.

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

Stable Origination/Underwriting/Servicing: Fitch believes BMWFS is a capable originator, underwriter and servicer for prime auto loan collateral, as evidenced by the historical delinquency and loss performance of its securitizations and managed portfolio.

RATING SENSITIVITIES

Unanticipated increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than the base case. This in turn could result in potential negative rating actions on the notes. Fitch evaluated the sensitivity of the ratings assigned to BMW Vehicle Owner Trust 2014-A to increased losses over the life of the transaction. Fitch's analysis found that the class A notes display minimal sensitivity to a moderate increase in defaults and losses, showing potential downgrades of up to one notch, if at all, under Fitch's moderate (1.5x base case loss) scenario. However, class A notes could experience downgrades of up to two rating categories under Fitch's severe (2.5x base case loss) scenario.

Key Rating Drivers and Rating Sensitivities are further detailed in the accompanying presale report, 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:

--'Global Structured Finance Rating Criteria' (May 20, 2014);

--'Rating Criteria for U.S. Auto Loan ABS' (April 7, 2014);

--'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=754389

Rating Criteria for U.S. Auto Loan ABS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=738718

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=890835

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
Margaret Rowe
Director
+1-312-368-3167
Fitch Ratings, Inc.
70 W. Madison St.
Chicago IL 60602
or
Committee Chairperson
Du Trieu
Senior Director
+1-312-368-2091
or
Media Relations
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Margaret Rowe
Director
+1-312-368-3167
Fitch Ratings, Inc.
70 W. Madison St.
Chicago IL 60602
or
Committee Chairperson
Du Trieu
Senior Director
+1-312-368-2091
or
Media Relations
Sandro Scenga, New York, +1 212-908-0278
sandro.scenga@fitchratings.com