Fitch to Rate Ford Credit Auto Lease Trust 2013-B; Issues Presale
NEW YORK -- October 21, 2013
Link to Fitch Ratings' Report: Ford Credit Auto Lease Trust 2013-B (US ABS)
Fitch Ratings expects to assign the following ratings and Rating Outlooks to
Ford Credit Auto Lease Trust 2013-B:
--$177,000,000 class A-1 'F1+sf';
--$101,000,000 class A-2A 'AAAsf'; Outlook Stable;
--$303,000,000 class A-2B 'AAAsf'; Outlook Stable;
--$250,000,000 class A-3 'AAAsf'; Outlook Stable;
--$78,190,000 class A-4 'AAAsf'; Outlook Stable;
--$51,080,000 class B 'AAsf'; Outlook Stable;
--$47,670,000 class C 'Asf'; Outlook Stable.
Key Rating Drivers
Strong Credit Quality: Credit quality for the pool is consistent with recent
pools. The weighted average (WA) Fair Isaac Corp. (FICO) score is 746 and WA
original term is 33 months, with 17.96% of the leases having terms of more
than 36 months. The pool is geographically diverse, has nine months seasoning
and consists of 100% new vehicles.
Adequate Structural Protection: 2013-B is a sequential-pay structure. Initial
hard credit enhancement for the class A, B, and C notes total 20.40%, 15.90%,
and 11.70%, respectively. An increase from 2013-A due to including a class
A-2B note and Fitch's interest rate stresses applied.
Consistent Lease Maturities: 2013-B has a WA original term of 33 months and
fewer longer-term leases than 2012-A. The largest 12-month residual maturity
period totals 49.04% of the total RV. Fitch accounted for this RV maturity
risk by applying a twelve-month stressed loss average to derive the RV loss
proxy and applied adjustments to the weightings of the RV haircuts.
State of the Wholesale Vehicle Market: The U.S. wholesale vehicle market has
remained healthy thus far in 2013. However, Fitch remains cautious that
general economic softness and expected growing used vehicle supply could have
a negative impact on future residual realizations.
Stable Corporate Health: Fitch currently rates the long-term issuer default
rating (IDR) of Ford, the parent of Ford Credit, and Ford Credit 'BBB?' with a
Stable Rating Outlook.
Consistent Origination/Underwriting/Servicing: Ford Credit demonstrates good
capabilities as originator, underwriter, and servicer, as evidenced by
historical delinquency, credit, and residual value loss performance of its
managed portfolio and securitizations. Fitch deems Ford Credit capable of
adequately servicing 2013-B.
Legal Structure Integrity: The legal structure of the transaction should
provide that a bankruptcy of Ford Credit would not impair the timeliness of
payments on the securities.
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. This in turn could result in
potential negative rating actions on the notes. Fitch evaluated the
sensitivity of the ratings assigned to FCALT 2013-B to increased credit and
residual losses over the life of the transaction.
Fitch's analysis found that the transaction displays some sensitivity to
increased defaults and credit losses, showing downgrades of one rating
category under Fitch's 1.5x base case loss scenario, while experiencing
downgrades of one or two rating categories under Fitch's severe (2.5x base
case loss) scenario. The transaction shows significantly more sensitivity to
residual loss volatility. Under its severe residual loss scenario, Fitch would
expect to downgrade all classes of notes by two or more rating categories.
Key rating drivers and rating sensitivities are further detailed in Fitch's
presale report, available at 'www.fitchratings.com' or by clicking on the
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria', May 2013;
--'Criteria for Rating U.S. Auto Lease ABS', April 2013;
--'Counterparty Criteria for Structured Finance and Covered Bonds', May 2013;
--'Criteria for Servicing Continuity Risk in Structured Finance', July 2013;
--'Structured Finance Tranche Thickness Metrics', July 2011;
--'Criteria for Interest Rate Stresses in Structured Finance Transactions',
Applicable Criteria and Related Research:
Counterparty Criteria for Structured Finance and Covered Bonds
Criteria for Servicing Continuity Risk in Structured Finance
Structured Finance Tranche Thickness Metrics
Criteria for Interest Rate Stresses in Structured Finance Transactions
Global Structured Finance Rating Criteria
Criteria for Rating U.S. Auto Lease ABS
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ON THE FITCH WEBSITE.
Eugene Kushnir, +1 212-908-0830
Fitch Ratings, Inc., One State Street Plaza, New York, NY 10004
Peter Chung, +1 212-908-0724
Hylton Heard, +1 212-908-0214
Sandro Scenga, +1 212-908-0278
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