Fitch Rates Ford Credit Auto Owner Trust 2013-D
NEW YORK -- November 26, 2013
Fitch Ratings assigns the following ratings to the notes issued by Ford Credit
Auto Owner Trust 2013-D:
--$347,900,000 class A-1 'F1+sf';
--$467,100,000 class A-2 'AAAsf'; Outlook Stable;
--$471,600,000 class A-3 'AAAsf'; Outlook Stable;
--$110,200,000 class A-4 'AAAsf'; Outlook Stable;
--$44,110,000 class B 'AAsf'; Outlook Stable;
--$29,410,000 class C 'Asf'; Outlook Stable;
--$29,410,000 class D 'BBBsf'; Outlook Stable.
KEY RATING DRIVERS
Stable Credit Quality: The 2013-D pool is consistent with prior deals, with a
WA FICO score of 726, and new vehicle contracts total 87.37%. The pool is
geographically diverse with seven months of seasoning, while 41.37% of the
pool consists of loans with terms of more than 60 months.
Adequate Credit Enhancement Structure: The cash flow distribution is a
sequential-pay structure, consistent with prior transactions. Initial hard
credit enhancement (CE) for the class A notes totals 5.50%, consisting of
7.00% subordination and a 0.50% non-declining reserve offset by
under-collateralization of 2.00% on an adjusted pool basis.
Stable Portfolio/Securitization Performance: Delinquencies and losses on Ford
Credit's portfolio and 2009-2012 FCAOT securitizations are currently at low
levels, supported by the improving (albeit volatile) U.S. economy, and healthy
used vehicle values resulting in higher recovery rates.
Positive Corporate Performance: Fitch currently rates the long-term Issuer
Default Rating (IDR) of Ford Motor Company (Ford), the parent of Ford Credit,
and Ford Credit 'BBB-' with a Stable Rating Outlook.
Unstable Economic Outlook: A slower recovery and potential for volatility
could affect delinquencies and losses. Fitch's analysis accounts for this risk
by including poorer performing vintages from the recent recession in the base
case loss analysis.
Consistent Origination/Underwriting/Servicing: Ford Credit demonstrates
adequate abilities as originator, underwriter and servicer, as evidenced by
historical portfolio and securitizations' delinquency and loss performance.
Fitch deems Ford Credit an adequate servicer to service 2013-D.
Integrity of Legal Structure: 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 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 all classes of Ford Credit Auto Owner
Trust 2013-D to increased losses over the life of the transaction. Fitch's
analysis found that the class B, C and D notes display some sensitivity to
increased defaults and losses, showing potential downgrades of up to one
category under Fitch's moderate (1.5x base case loss) scenario. All classes of
notes could experience downgrades of up to two rating categories under Fitch's
severe (2.5x base case loss) scenario.
Key Rating Drivers and Rating Sensitivities are further described in the
accompanying presale report.
The presale report is available to all investors on Fitch's website at
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Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria'(May 25, 2013);
--'Rating Criteria for U.S. Auto Loan ABS' (April 10 2013);
--'Structured Finance Tranche Thickness Metrics' (July 29, 2011).
Applicable Criteria and Related Research:
Structured Finance Tranche Thickness Metrics
Rating Criteria for U.S. Auto Loan ABS
Global Structured Finance Rating Criteria
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