Fitch Ratings expects to assign the following ratings and Rating Outlooks to the notes issued by
KEY RATING DRIVERS
Strong Collateral Quality: The weighted average (WA) Fair Isaac Corp. (FICO) score of 767 is consistent with recently issued MBART transactions and, combined with the strong internal credit-tier distribution, indicates a strong borrower.
Increased Used Vehicle Concentration: Concentrations of used vehicles increased to 72.43% in 2014-1 from 61.38% in 2013-1, representing the highest level in any MBART transaction to date. The increase in used vehicles has resulted in a higher WA loan-to-value (LTV) ratio for the 2014-1 pool, which could result in higher loss severities on defaulted loans.
Sufficient Credit Enhancement: Total initial hard credit enhancement (CE) for class A notes is 2.75%. Yield supplement OC will be used to boost the transaction's annual percentage rate (APR), providing expected excess spread of 2.60%. CE is sufficient to cover in excess of a 5.0x multiple of Fitch's base case expected lifetime cumulative net losses (CNLs) of 1%.
Strong Portfolio/Securitization Performance:
Legal Structure Integrity: The legal structure of the transaction should provide that a bankruptcy of Daimler or MBFS would not impair the timeliness of payments on the securities.
Unanticipated increases in the frequency of defaults and loss severity on defaulted receivables 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
Key Rating Drivers and Rating Sensitivities are further detailed 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.
--'Global Structured Finance Rating Criteria' (
--'Rating Criteria for U.S. Auto Loan ABS' (
--'Structured Finance Tranche Thickness Metrics' (
Global Structured Finance Rating Criteria
Rating Criteria for U.S. Auto Loan ABS
Structured Finance Tranche Thickness Metrics
Source: Fitch Ratings
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