Fitch Affirms 8 and Upgrades 2 Classes of Ford Credit Auto Owner Trust

NEW YORK--()--As part of its ongoing surveillance, Fitch Ratings affirms eight and upgrades two classes from the Ford Credit Auto Owner Trust (FCAOT) 2012-D and 2015-B. A full list of rating actions follows at the end of this ratings action commentary.

KEY RATING DRIVERS

The rating upgrades of the applicable classes in the series 2015-B transaction are a result of strong loss coverage under Fitch's assumptions and stresses in cash flow modeling. The affirmations on the remaining notes in the 2012-D and 2015-B transactions reflect loss coverage levels consistent with current ratings. The transactions have continued to perform well within Fitch's cumulative net loss expectations to date.

The Positive Outlook of the 2015-B class C note reflects Fitch's view that the notes will continue to perform well and may warrant a review for a potentially positive rating action in the next six to 12 months.

The ratings reflect the quality of Ford Motor Credit Company's (FMCC) retail auto loan originations, the sound financial and legal structure of the transaction, and the strength of the servicing provided by FMCC.

RATING SENSITIVITIES

Unanticipated increases in the frequency of defaults and loss severity could produce loss levels higher than the current projected base case loss proxies and impact available loss coverage and multiples levels for the transactions. Lower loss coverage could impact the ratings and Rating Outlooks depending on the extent of the decline in coverage.

In Fitch's initial review of the transactions, the notes were found to have limited sensitivity to a 1.5x and 2.5x increase of Fitch's base case loss expectations. To date, the transactions have exhibited strong performance with losses well within Fitch's initial expectations with rising loss coverage and multiple levels. As such, a material deterioration in performance would have to occur within the asset pools 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 has taken the following rating actions:

2012-D:

--Class A-4 affirmed at 'AAAsf'; Outlook Stable;

--Class B affirmed at 'AAAsf'; Outlook Stable;

--Class C affirmed at 'AAAsf'; Outlook Stable;

--Class D affirmed at 'AAAsf'; Outlook Stable.

2015-B:

--Class A-2a affirmed at 'AAAsf'; Outlook Stable;

--Class A-2b 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 'AAAsf' from 'AAsf'; Outlook Stable;

--Class C upgraded to 'AAsf' from 'Asf'; Outlook revised to Positive from Stable.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)

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

Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 19 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=838868

Criteria for Servicing Continuity Risk in Structured Finance (pub. 17 Dec 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=875586

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Rating Criteria for U.S. Auto Loan ABS (pub. 21 Mar 2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878723

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=1002634

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1002634

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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Contacts

Fitch Ratings
Primary Analyst
John Alberici
Associate Director
+1-212-908-0370
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Committee Chairperson
Herman Poon
Senior Director
+1-212-908-0847
or
Media Relations:
Sandro Scenga, +1 212-908-0278
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
Committee Chairperson
Herman Poon
Senior Director
+1-212-908-0847
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com