Fitch to Rate Ally Auto Receivables Trust 2014-3; Issues Presale

NEW YORK--()--Link to Fitch Ratings' Report: Ally Auto Receivables Trust 2014-3 (US ABS)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=831008

Fitch Ratings expects to assign the following ratings and Outlooks to the notes issued by Ally Auto Receivables Trust 2014-3 (2014-3):

--$215,000,000 class A-1 F1+sf;

--$310,000,000 class A-2 'AAAsf'; Outlook Stable;

--$334,000,000 class A-3 'AAAsf'; Outlook Stable;

--$98,830,000 class A-4 'AAAsf'; Outlook Stable;

--$21,300,000 class B 'AAsf'; Outlook Stable;

--$17,550,000 class C 'Asf'; Outlook Stable;

--$16,430,000 class D 'BBBsf'; Outlook Stable.

KEY RATING DRIVERS

Weaker Collateral Quality: The 2014-3 collateral is weaker than that of recent transactions with a lower weighted average (WA) FICO and weaker internal credit-tier distributions; 60+ month loans, used vehicles and WA LTV are elevated versus 2013-2 (the last transaction rated by Fitch) and at the higher end of the range for AART transactions historically.

Credit Enhancement: Initial hard credit enhancement (CE) is unchanged from 2014-2 (not rated by Fitch). However, compared to 2013-2 is lower for the class A and D notes and higher for the class B and C notes. Excess spread per annum has decreased to 1.92%, the lowest historically for the platform.

Strong Portfolio/Securitization Performance: Ally's 2009?2014 portfolio and securitization delinquencies and losses continue to perform well and remain at very low levels historically through third-quarter 2014.

Evolving Wholesale Vehicle Market: The U.S. wholesale vehicle market (WVM) 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 severity. Fitch's analysis accounts for this risk by including periods of weak WVM performance in the derivation of its base case loss expectation.

Consistent Origination/Underwriting/Servicing: Fitch currently rates Ally Financial 'BB+'/Stable. Ally demonstrates solid capabilities as an originator, underwriter, and servicer, as evidenced by its historical portfolio and securitization performance. Fitch deems Ally capable to adequately service 2014-3.

Legal Structure Integrity: The legal structure of the transaction should provide that a bankruptcy of Ally 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 loss levels higher than the base case. This could result in potential rating actions on the notes. Fitch evaluated the sensitivity of the ratings assigned to all classes of 2014-3 to increased losses over the life of the transaction. Fitch's analysis found that the notes display limited sensitivity to increased defaults and losses, showing no expected impact on the rating of the notes under Fitch's moderate (1.5x base case loss) scenario. The notes could experience a downgrade of one rating category under Fitch's severe (2.5x base case loss) scenario.

Key Rating Drivers and Rating Sensitivities are further detailed in the presale report published today and available at 'www.fitchratings.com' or by clicking on the above link.

Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in Ally Auto Receivables Trust 2014-3 -- Appendix'. These R&W are compared to those of typical R&W for the asset class as detailed in Fitch's Oct. 31 special report, 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' .

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

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

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

--'Structured Finance Tranche Thickness Metrics' (July 2011);

--'Ally Auto Receivables Trust 2014-3 - Appendix' (December 2014).

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=943515

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
John Alberici
Associate Director
+1-212-908-0370
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Secondary Analyst
Timothy McNally
Analyst
+1-212-908-0870
or
Committee Chairperson
Bradley Sohl
Senior Director
+1-212-908-0792
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
John Alberici
Associate Director
+1-212-908-0370
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Secondary Analyst
Timothy McNally
Analyst
+1-212-908-0870
or
Committee Chairperson
Bradley Sohl
Senior Director
+1-212-908-0792
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: sandro.scenga@fitchratings.com