Fitch Expects to Rate Hyundai Auto Lease Securitization Trust 2013-A;
CHICAGO -- February 25, 2013
Fitch Ratings expects to assign the following ratings and Rating Outlooks to
the notes issued by Hyundai Auto Lease Securitization Trust 2013-A:
--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 2012-A, with a
strong WA FICO score of 743, seasoning of 11 months and similar residual value
(RV) maturity concentrations.
Aggressive Sales and Lease Portfolio Growth: Due to notable sales and lease
origination growth in recent years, there could be substantially more supply
of used Hyundai and Kia vehicles available for sale at auction in coming
years. As this could present a risk to residual values, Fitch has accounted
for this in the residual loss analysis.
Adequate CE Structure: Initial hard credit enhancement (CE) will be 16.95% and
13.50% for the class A and B notes, respectively, growing to 18.95% and 15.50%
of the initial securitization value. Initial excess spread is expected to be
4.14%. Loss coverage is adequate to support Fitch's stressed assumptions.
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 used
vehicle market, leading to higher recovery rates and residual realizations.
Used Vehicle Market Uncertainty: While the wholesale used vehicle market in
the U.S. is currently strong, factors such as increased new vehicle sales and
lease volumes penetrating the secondary market could cause gains to subside.
Legal Structure Integrity: The legal structure of the transaction should
provide that a bankruptcy of HCA would not impair the timeliness of payments
on the securities.
Stable Origination/Underwriting/Servicing: Fitch believes HCA to be a capable
originator, underwriter, and servicer, as evidenced by historical managed
portfolio delinquency and loss experience as well as securitization
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 could result in potential
rating actions on the notes. Fitch evaluated the sensitivity of the ratings
assigned to HALST 2013-A to increased credit and residual losses over the life
of the transaction. Fitch's analysis found that the transaction displays
relatively little sensitivity to increased defaults and credit losses, showing
downgrades of only one rating category even under Fitch's severe (2.5x base
case loss) scenario. The transaction shows significantly more sensitivity to
residual loss volatility, though even under Fitch's severe scenario, the class
A notes would be expected to retain an investment grade rating while the class
B notes would be expected to pay in full.
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Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria', June 6, 2012;
--'Criteria for Rating U.S. Auto Lease ABS', May 14, 2012;
--'Counterparty Criteria for Structured Finance Transactions, May 30, 2012;
--'Structured Finance Tranche Thickness Metrics', July 29, 2011.
Applicable Criteria and Related Research Hyundai Auto Lease Securitization
Trust 2013-A (US ABS)
Structured Finance Tranche Thickness Metrics
Counterparty Criteria for Structured Finance Transactions
Global Structured Finance Rating Criteria
Criteria for Rating U.S. Auto Lease ABS
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