NEW YORK--(BUSINESS WIRE)--This is a correction of a press release dated April 2, 2014. It provides the correct final assigned ratings for Ford Auto Securitization Trust 2014-R2 Class A-1. The ratings were incorrectly listed as 'F1' short-term ratings. The correct final assigned rating for Class A-1 is 'AAAsf' with a Stable Outlook.
Fitch Ratings assigns the following ratings and Rating Outlooks to the Ford Auto Securitization Trust 2014-R2 (FAST 2014-R2) notes:
--$223,636,000 class A-1 'AAAsf'; Outlook Stable;
--$247,175,000 class A-2 'AAAsf'; Outlook Stable;
--$129,309,000 class A-3 'AAAsf'; Outlook Stable;
--$18,960,000 class B 'AA+sf'; Outlook Stable;
--$12,630,000 class C 'A+sf'; Outlook Stable;
--$12,630,000 class D 'BBB+sf'; Outlook Stable.
KEY RATING DRIVERS
Strong Credit Quality: The 2014-R2 pool is relatively consistent versus prior 2013 deals (all not rated [NR] by Fitch) and 2012-R1, with a stronger weighted average (WA) FICO score of 746, 96.2% new vehicles and seasoning of eight months, and the pool is geographically diverse. Longer-term loans (loans with terms exceeding 60 months) increased to 48%, the highest level ever seen in a FAST transaction.
Adequate Credit Enhancement: The cash flow distribution is a sequential-pay structure, consistent with prior transactions. Initial hard credit enhancement (CE) for class A notes totals 6.00%, consisting of 7.00% subordination and a 1.00% nondeclining reserve offset by undercollateralization of 2.00%. Excess spread totals 3.95%, similar to 2013 transactions and 2012-R1.
Improved Portfolio/Securitization Performance: Losses on FCCL's portfolio and 2009 - 2013 FAST securitizations declined in the past two years, supported by stable macroeconomic conditions and used vehicle values, resulting in low losses.
Consistent Origination/Underwriting/Servicing: FCCL demonstrates good capabilities as originator, underwriter and servicer, as evidenced by historical delinquency and loss performance of its managed portfolio and securitizations. Fitch deems FCCL capable to service 2014-R2.
Stable Corporate Performance: Fitch rates the Long-term Issuer Default Rating (IDR) of Ford Motor Credit Company (Ford Credit), the parent of FCCL, 'BBB-' with a Stable Outlook.
Stable Wholesale Vehicle Market: The Canadian wholesale vehicle market (WVM) is currently stable. However, Fitch remains cautious of the potential for volatility in values in 2014 stemming from increasing used vehicle supply, economic weakness and higher gas prices, which could pressure used vehicle values and recovery rates.
Integrity of Legal Structure: The legal structure of the transaction should provide that a bankruptcy of FCCL would not impair the timeliness of payments on the securities.
Unanticipated increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than the base case and could result in potential rating actions on the notes. Fitch evaluated the sensitivity of the ratings assigned to all classes of 2014-R2 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) and severe (2.5x base case loss) scenarios.
Key rating drivers and rating sensitivities are further detailed in the presale report published. Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in Ford Auto Securitization Trust 2014-R2 - Appendix'. This R&W is compared to those of typical R&W for the asset class as detailed in Fitch's April 17, 2012 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' (May 24, 2013);
--'Rating Criteria for U.S. Auto Loan ABS' (April 10 2013);
--Ford Auto Securitization Trust 2014-R2 - Appendix' (March 24, 2014).