cross-sector rating methodology for originator assessment (OA) in rating
asset-backed transactions (ABS).
The methodology covers transactions where the underlying asset pool
comprises auto and consumer loans, granular small and medium-sized
enterprise (SME) exposures, and multi-pool and equipment financial lease
receivables in EMEA. Publication of the cross-sector methodology will not
result in any changes to outstanding ratings of EMEA ABS auto/consumer
loan, SME and lease transactions.
The report, "Originator Assessment in EMEA ABS Auto/Consumer Finance, SME
and Lease Transactions", is now available on www.moodys.com. Moody's
subscribers can access this report via the link provided at the end of
this press release.
Moody's completes the originator assessment at the closing of a
transaction, whenever applicable. Moody's approach to OA analysis is
twofold, evaluating (1) originator ability, or the relevant entity's
ability to effectively perform its tasks as an originator; and (2)
originator stability, assessing the factors that define the originator's
operational and financial stability over the life of the transaction.
"Excluding factors such as the macroeconomic environment, we hone in on
the entity's originator and underwriting practices, as well as the effect
of these practices on asset performance," says
Moody's Vice President - Senior Analyst. "We also assess quality control
and audit functions, along with technology infrastructure."
In line with Moody's existing methodologies for rating EMEA auto/consumer
loan, SME and lease transactions, OA analysis could result in an
adjustment to the rating agency's asset-based inputs and thus its
assessment of collateral quality for the relevant transactions.
"The credit impact of such an adjustment could be positive, neutral or
negative for the expected loss on notes and the current ratings on
President - Analyst.
Furthermore, Moody's translates its OA analysis into an OA score, which
accounts for originator ability and stability, to compare originators of
the same product type across various markets.
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