News Column

Fitch Rates Hyundai Auto Lease Securitization Trust 2014-B

June 25, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings assigns the following ratings and Rating Outlooks to the asset-backed notes issued by Hyundai Auto Lease Securitization Trust 2014-B:

--Class A-1 'F1+sf';

--Class A-2 'AAAsf'; Outlook Stable;

--Class A-3 'AAAsf'; Outlook Stable;

--Class A-4 'AAAsf'; Outlook Stable;

--Class B 'AAsf'; Outlook Stable.

KEY RATING DRIVERS

Stable Collateral Quality: The pool is consistent with recently issued HALST pools, with a strong weighted average (WA) Fair Isaac Corp. (FICO) score of 741 and seasoning of nine months. Notably, the residual composition of the pool decreased substantially to 62.4% as a percent of the securitization value (SV), mainly due to the increase in leases with a term greater than 36 months.

Adequate CE Structure: Initial hard credit enhancement (CE) for the class A and B notes totals 16.95% and 13.50%, respectively, consistent with 2014-A. Initial excess spread is 4.07%. Loss coverage is adequate to support Fitch Ratings' 'AAAsf' and 'AAsf' stressed assumptions.

Stable Loss Performance: Credit and residual losses on HCA's portfolio have begun to stabilize from low levels seen in 2010 and 2011. This is a result of increased origination volume and a stabilizing wholesale used vehicle market. Fitch's credit loss proxy is 1% of the SV.

Stable RV Performance Despite Increased Volume: Fitch lessoned its residual haircut intended to account for HCA's substantial origination growth as HCA has begun exhibiting residual performance consistent with market trends despite increased residual maturity volume.

Stabilizing Wholesale Market: The U.S. wholesale vehicle market has remained strong in recent years. However, increasing off-lease vehicle supply and pressure from increased production levels are leading to lower residual realization (as exhibited by several auto finance companies). Fitch has accounted for this in its 'AAAsf' and 'AAsf' stressed residual loss expectation of 31% and 27%, respectively.

RATING SENSITIVITIES

Unanticipated decreases in the value of returned vehicles and/or increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than the base case. This would likely result in declines of credit enhancement and loss coverage levels available to the notes. Hence, Fitch conducts sensitivity analyses by increasing the transaction's initial base case RV and credit loss assumptions and examining the rating implications on all classes of issued notes. The increases to the base case losses are applied such that they represent moderate (1.5x) and severe (2.5x) stresses, respectively, and are intended to provide an indication of the rating sensitivity of notes to unexpected deterioration of a trust's performance.

The presale report is 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 20, 2014);

--'Criteria for Rating U.S. Auto Lease ABS' (April 24, 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

Criteria for Rating U.S. Auto Lease ABS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=746763

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=836542

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

Autumn Mascio, +1 212-908-0896

Director

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY, 10004

or

Secondary Analyst

Eugene Kushnir, +1 212-908-0830

Associate Director

or

Committee Chairperson

Hylton Heard, +1 212-908-0214

Senior Director

or

Media Relations:

Sandro Scenga, +1 212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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