News Column

Fitch Rates CNH Equipment Trust 2014-A

February 20, 2014

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings assigns the following ratings to the CNH Equipment Trust 2014-A notes:

--$172,000,000 class A-1 'F1+sf';

--$334,000,000 class A-2 'AAAsf'; Outlook Stable;

--$328,000,000 class A-3 'AAAsf'; Outlook Stable;

--$166,000,000 class A-4 'AAAsf'; Outlook Stable;

--$23,017,000 class B 'Asf'; Outlook Stable.

Fitch's stress and rating sensitivity analysis are discussed in the presale report titled 'CNH Equipment Trust 2014-A', dated Feb. 10, 2014, which is available on Fitch's web site. The presale report details how Fitch addresses the key rating drivers summarized below.

Key Rating Drivers

High AG Concentration: The 2014-A collateral pool consists of 93.29% AG and 6.71% CO. While the 2014-A AG concentration is consistent with CNH Capital securitizations going back to 2009, the AG concentrations in all these transactions are significantly higher relative to CNH Capital transactions issued prior to 2009, which consisted of approximately 18%-32% CO.

Consistent Collateral Concentrations: The pool contains 47.32% used equipment and is comparable to the prior transactions, which typically had concentrations ranging from 46.00%?50.00%. Furthermore, the pool consists of 77.90% annual-pay contracts, which historically have experienced a lower level of losses than other payment types.

Sufficient Credit Enhancement: Hard credit enhancement (CE) for the 2014-A transaction is unchanged from the prior six transactions. Class A and class B hard CE remains at 4.50% and 2.25%, respectively. Expected excess spread of 1.98% (per annum [p.a.]) is up from 2013-D's 1.92%.

Quality Origination, Underwriting, and Servicing: CNH Capital has demonstrated adequate abilities as originator, underwriter and servicer, as evidenced by historical delinquency and loss performance of securitized trusts and the managed portfolio.

Integrity of Legal Structure: The legal structure of the transaction should provide that a bankruptcy of the trust would not impair the timeliness of payments on the securities.

RATING SENSITIVITIES

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 to increased losses over the life of the transaction. Fitch's analysis found that the notes display limited sensitivity to increased defaults and losses, showing limited impact on the rating of the notes under Fitch's moderate (1.5x base case loss) scenario. The notes could experience downgrades of at least two rating category under Fitch's severe (2.5x base case loss) scenario.

Key Rating Drivers and Rating Sensitivities are further described in the presale report dated Feb. 10, 2013. Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'CNH Equipment Trust 2014-A - Appendix'. These R&Ws are compared to those of typical R&W for the asset class as detailed in the special report 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' dated April 17, 2012.

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);

--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' (April 17, 2012);

--'Criteria for Rating U.S. Equipment Lease and Loan ABS Sector' (Dec. 19, 2013)

--'Structured Finance Tranche Thickness Metrics' (July 29, 2011);

--'CNH Equipment Trust 2014-A Presale Report' (Feb. 10, 2014);

--'CNH Equipment Trust 2014-A Presale Report- Appendix' (Feb. 10, 2014).

Applicable Criteria and Related Research:

CNH Equipment Trust 2014-A (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=735381

CNH Equipment Trust 2014-A -- Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=735418

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions -- Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=676496

Criteria for Rating U.S. Equipment Lease and Loan ABS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=726362

Structured Finance Tranche Thickness Metrics

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=646951

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=821151

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Thomas Kaiser, CPA

Analyst

+1-312-368-3338

Fitch Ratings, Inc.

70 West Madison

Chicago, IL 60602

or

Secondary Analyst

John Alberici

Analyst

+1-212-908-0370

or

Committee Chairperson

Brad Sohl

Senior Director

+1-212-908-0792

or

Media Relations:

Elizabeth Fogerty, New York, +1 212-908-0526

Email: elizabeth.fogerty@fitchratings.com

Source: Fitch Ratings


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Business Wire


Story Tools