CHICAGO--(BUSINESS WIRE)--Fitch Ratings takes various rating actions on CNH Equipment Trust 2014-A. A full list of rating actions follows at the end of this rating action commentary.
KEY RATING DRIVERS
The affirmations of the class A notes and the upgrade to the class B notes reflect loss coverage levels consistent with the ratings of 'AAAsf' and 'AAsf', respectively. The Stable Outlook for the class A notes reflects Fitch's expectation for loss coverage and credit enhancement to continue to improve as the transaction amortizes. Maintaining the Positive Outlook for the class B notes reflects the possibility for positive rating actions in the next 12 to 18 months.
Unanticipated increases in the frequency of defaults and loss severity could produce loss levels higher than the current projected base case loss proxy, which would impact available loss coverage. Lower loss coverage could impact ratings and rating outlooks, depending on the extent of the decline in coverage. In Fitch's initial review of the transaction, the notes were found to have limited sensitivity to 1.5x and 2.5x higher of Fitch's base case loss expectation. Initial key rating drivers and rating sensitivities are further described in the new issue report published Feb. 10, 2014.
To date, the transaction has exhibited strong performance with losses within Fitch's initial expectations with rising loss coverage and multiple levels. As such, continued strong performance for the transaction would most likely result in continued stable ratings. Conversely, a material deterioration in performance would have to occur within the asset pool to have potential negative impact on the outstanding ratings.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
Fitch's analysis of the Representations and Warranties (R&W) of CNH 2014-A can be found in 'CNH Equipment Trust 2014-A - 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 Global Structured Finance Transactions' dated June 12, 2015.
Fitch has taken the following rating actions on CNH Equipment Trust 2014-A:
--Class A-2 affirmed at 'AAAsf'; Outlook Stable.
--Class A-3 affirmed at 'AAAsf'; Outlook Stable.
--Class A-4 affirmed at 'AAAsf'; Outlook Stable;
--Class B upgraded to 'AAsf' from 'Asf'; Outlook Positive.
Additional information is available at www.fitchratings.com.
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14
Criteria for Rating U.S. Equipment Lease and Loan ABS (pub. 03 Dec 2015)
Criteria for Servicing Continuity Risk in Structured Finance (pub. 17
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
Rating Criteria for Structured Finance Servicers (pub. 23 Apr 2015)
CNH Equipment Trust 2014-A -- Appendix
Dodd-Frank Rating Information Disclosure Form