KEY RATING DRIVERS
Strong Credit Quality Obligors: Approximately 67% of the portfolio is rated by Fitch or another
Consistent Concentrations: Both obligor and industry concentrations are consistent with 2012-1. The top 20 obligors by balance represent 49%, consistent with 2012-1.
Low Delinquency and Loss History: Wheels' historical managed portfolio and prior transaction delinquency and loss experience is low, even during periods marked by elevated levels in other consumer and commercial asset classes.
Minimal Residual Risk: The 2014-1 leases are all open-ended, meaning lessees bear residual risk. Therefore, the trust is only exposed to wholesale market risk in the event of an obligor default. Even then, vehicle dispositions have largely resulted in gains relative to book value due to conservative amortization and substantial vehicle discounts obtained by Wheels.
Sufficient Credit Enhancement (CE): CE has increased for the class A and B notes versus the 2012-1 transaction, while class C CE has declined. Total CE is sufficient to support loss levels consistent with ratings of 'AAAsf', 'AAsf', and 'A-sf', for class A, B, and C notes, respectively.
Quality Origination, Underwriting, and Servicing Platform: Rated 'A/F1' by Fitch,
Unanticipated increases in the frequency of defaults and transaction fees, or decreases in recovery rates, 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 Wheels 2014-1 to increased default levels and servicing fees, as well as lower recovery rates for the truck component of the collateral pool, over the life of the transaction.
Fitch's analysis found that the transaction displays relatively little sensitivity to increased servicing fees and decreased truck recovery rates. In both cases, the notes showed rating sensitivity of no more than one rating category. The transaction shows significantly more sensitivity to higher default rates, which Fitch stressed by assuming all unrated obligors carry a 'CCC' rating.
Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'Wheels SPV 2, LLC, Series 2014-1 - Appendix'. This R&W is 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
The new issue report is available at 'www.fitchratings.com' or by clicking on the link at the end of the press release.
Additional information is available at www.fitchratings.com.
--'Global Structured Finance Rating Criteria' (
--'Criteria for Rating U.S. Auto Lease ABS' (
--'Global Rating Criteria for Corporate CDOs' (
--'Counterparty Criteria for Structured Finance and Covered Bonds' (
--'Structured Finance Tranche Thickness Metrics' (
--'Criteria for Interest Rate Stresses in Structured Finance Transactions' (
--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' (
--'Wheels SPV 2, LLC, Series 2014-1 (US ABS)' (
--'Wheels SPV 2, LLC, Series 2014-1 -- Appendix' (
Wheels SPV 2, LLC, Series 2014-1 -- Appendix
Global Structured Finance Rating Criteria
Criteria for Rating U.S. Auto Lease ABS
Global Rating Criteria for Corporate CDOs
Counterparty Criteria for Structured Finance and Covered Bonds
Structured Finance Tranche Thickness Metrics
Criteria for Interest Rate Stresses in Structured Finance Transactions
Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions
Wheels SPV 2, LLC, Series 2014-1 (US ABS)
70 W. Madison
Source: Fitch Ratings
Most Popular Stories
- Neighbor Warns Chris Brown to Stay Off His Property
- Venezuelan Officials Banned From Traveling in U.S.
- As Jobs Market Strengthens, Many Don't Feel It
- Hispanic Arts Leaders Unite Across the Border
- Islamic State Fights for Control of Syrian Oil Wealth
- Adrienne Bailon Disses Ex-Lover Rob Kardashian
- House Votes to Sue Obama
- NSHMBA Names Lincoln as Automotive Partner
- WWE Showing Off Its Muscles
- Exxon Profit Rises, Production Drops