News Column

Fitch Rates Ford Credit Auto Owner Trust 2014-B

June 24, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings assigns the following ratings to the notes issued by Ford Credit Auto Owner Trust 2014-B:

-- $394,100,000 class A-1 'F1+sf';

-- $538,700,000 class A-2 'AAAsf'; Outlook Stable;

-- $464,500,000 class A-3 'AAAsf'; Outlook Stable;

-- $102,440,000 class A-4 'AAAsf'; Outlook Stable;

-- $47,360,000 class B 'AAsf'; Outlook Stable;

-- $31,570,000 class C 'Asf'; Outlook Stable;

-- $31,570,000 class D 'NR'.

Fitch's presale report is available to all investors at 'www.fitchratings.com' or by clicking on the above link.

KEY RATING DRIVERS

Stable Credit Quality: The 2014-B pool is consistent with prior deals, with a WA FICO score of 726, and new vehicle contracts total 88.8%. The pool is geographically diverse with eleven months of seasoning, while 42.8% 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. Initial hard credit enhancement (CE) for the class A notes totals 5.50%, consisting of 7.00% subordination and a 0.50% nondeclining 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 2009-2013 securitizations are currently at low levels, supported by the slowly improving U.S. economy and stable used vehicle values and recovery rates.

Positive Corporate Performance: Fitch currently rates the long-term IDR of Ford Motor Company (Ford), the parent of Ford Credit, and Ford Credit 'BBB-' with a Positive Rating Outlook.

Slow Economic Recovery: 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 2014-B.

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.

RATING SENSITIVITY

Unanticipated increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than the base case. This 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 2014-B to increased losses over the life of the transaction. Fitch's analysis found that the class B and C 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.

Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'Ford Credit Auto Owner Trust 2014-B - Appendix'. This R&W is compared to those of typical R&W for the asset class as detailed in Fitch's April 17, 2012 special report, 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions'.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

-- 'Global Structured Finance Rating Criteria' (May 20, 2014);

-- 'Rating Criteria for U.S. Auto Loan ABS' (April 7 2014);

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

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748821

Rating Criteria for U.S. Auto Loan ABS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=738718

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=836303

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, Inc.

Primary Analyst

Eugene Kushnir, +1-212-908-0830

Associate Director

One State Street Plaza

New York, NY 10004

or

Secondary Analyst

Andrew Tinari, +1-312-368-3127

Analyst

or

Committee Chairperson

Du Trieu, +1-312-368-2091

Senior Director

or

Media Relations, New York

Sandro Scenga, +1-212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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