Fitch Expects to Rate Hyundai Auto Receivables Trust 2014-B; Presale Issued
NEW YORK -- May 2, 2014
Fitch Ratings expects to assign the following ratings and Rating Outlooks to
the notes issued by Hyundai Auto Receivables Trust 2014-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;
--Class C asset-backed notes 'Asf'; Outlook Stable;
--Class D asset-backed notes 'BBBsf'; Outlook Stable.
KEY RATING DRIVERS
Stable Collateral Quality: The 2014-B pool is consistent with 2014-A and 2013
pools, exhibiting a weighted average (WA) FICO score of 744, 94.6% of new
vehicles and 5.8 months of seasoning. The WA LTV has increased versus recent
pools; however, overall credit quality has improved considerably post-2008.
Sufficient CE Structure: Initial hard credit enhancement (CE) for the notes is
unchanged versus recent transactions and excess spread is expected to be
2.02%, down from 2014-A (2.75%). Under Fitch's analysis with a base case CNL
proxy of 1.65%, the structure is able to support stressed losses commensurate
with the expected ratings.
Improved Loss Performance: HCA's portfolio and securitization losses declined
significantly from peak 2008 levels, driven by stronger underwriting and
credit quality as well as the improving U.S. economy and stable used vehicle
Stable Origination, Underwriting, and Servicing: HCA demonstrates adequate
abilities as originator, underwriter, and servicer to service 2014-B, as
evidenced by the historical performance of its managed portfolio and
Integrity of the Legal Structure: The legal structure of the transaction
should provide that a bankruptcy of HCA would not impair the timeliness of the
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.
This in turn could result in Fitch taking negative rating actions on the
notes. Fitch evaluated the sensitivity of the ratings assigned to Hyundai Auto
Receivables Trust 2014-B to increased credit losses over the life of the
transaction. Fitch's analysis found that the notes display limited sensitivity
to increased defaults and losses, showing no expected impact on the rating of
the notes under Fitch's moderate (1.5x base case loss) scenario. The notes
could experience a downgrade 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, available at 'www.fitchratings.com' or by
clicking on the above link.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' (May 24, 2013);
--'Rating Criteria for U.S. Auto Loan ABS' (April 7, 2013);
--'Structured Finance Tranche Thickness Metrics' (July 29, 2011);
--'Hyundai Auto Receivables Trust 2014-B -- Appendix' (May 2, 2014);
--'Hyundai Auto Receivables Trust 2014-B (May 2, 2014).
Applicable Criteria and Related Research: Hyundai Auto Receivables Trust
2014-B (US ABS)
Global Structured Finance Rating Criteria
Rating Criteria for U.S. Auto Loan ABS
Structured Finance Tranche Thickness Metrics
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Fitch Ratings, Inc.
33 Whitehall St.
New York, NY 10004
Sandro Scenga, +1 212-908-0278
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