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RPT-Fitch Expects to Rate Hyundai Auto Lease Securitization Trust 2013-B; Presale Issued
August 5, 2013 / 1:02 PM / 4 years ago

RPT-Fitch Expects to Rate Hyundai Auto Lease Securitization Trust 2013-B; Presale Issued

Aug 5 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings expects to assign the following ratings and Rating Outlooks to the notes issued by Hyundai Auto Lease Securitization Trust 2013-B:

--Class A-1 asset-backed notes ‘F1+sf’;

--Class A-2 asset-backed notes ‘AAAsf’; Outlook Stable;

--Class A-3 asset-backed notes ‘AAAsf’; Outlook Stable;

--Class A-4 asset-backed notes ‘AAAsf’; Outlook Stable;

--Class B asset-backed notes ‘AAsf’; Outlook Stable.

KEY RATING DRIVERS

Stable Collateral Quality: The pool is consistent with that of 2013-A, with a strong weighted average (WA) Fair Isaac Corp. (FICO) score of 743, seasoning of eight months, a WA original term of 39 months and a similar residual value (RV) concentration (67%).

Aggressive Sales and Lease Portfolio Growth: Due to notable sales and lease origination growth in recent years, there could be a substantial increase in the supply of used Hyundai and Kia vehicles available for sale at auction in the coming years. Fitch has accounted for this in its residual loss analysis, as growth in used vehicle volume could impact RVs.

Adequate Credit Enhancement Structure: Initial hard credit enhancement (CE) will be 16.95% and 13.50% for class A and B notes, respectively, growing to 18.95% and 15.50% of the initial securitization value (SV). Initial excess spread is expected to be 3.90%.

Stable Loss Performance: Credit and residual losses on HCA’s portfolio continue to decline significantly from the elevated levels seen in 2008 and 2009. This is a result of strong obligor credit quality and a solid wholesale used vehicle market, leading to higher recovery rates and residual realizations.

Used Vehicle Market Uncertainty: While the wholesale vehicle market in the U.S. is currently strong (as factors such as increased new vehicle sales and lease volumes penetrate the secondary market), gains may subside.

Stable Origination/Underwriting/Servicing: Fitch believes HCA to be a capable originator, underwriter and servicer, as evidenced by its historical managed portfolio delinquency and loss experience, as well as securitization performance.

RATING SENSITIVITY

Unanticipated decreases in the value of returned vehicles and/or increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than the base case and would likely result in declines of credit enhancement and loss coverage levels available to the notes.

Hence, Fitch conducts sensitivity analyses by increasing the transaction’s initial base case RV and credit loss assumptions and examining the rating implications on all classes of issued notes. The increases to the base case losses are applied such that they represent moderate (1.5x) and severe (2.5X) stresses, respectively, and are intended to provide an indication of the rating sensitivity of notes to unexpected deterioration of a trust’s performance.

Our Standards:The Thomson Reuters Trust Principles.
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