News Column

Fitch to Rate to GE Equipment Transportation LLC 2014-1; Issues Presale

June 9, 2014

NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: GE Equipment Transportation LLC, Series 2014-1 (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749953

Fitch Ratings expects to assign the following ratings and Rating Outlooks to the notes issued by GE Equipment Transportation LLC, Series 2014-1 (GEET2014-1) upon closing of the transaction:

--$178,400,000 class A-1 notes 'F1+sf';

--$217,000,000 class A-2 notes 'AAAsf;' Outlook Stable;

--$217,000,000 class A-3 notes 'AAAsf'; Outlook Stable;

--$88,500,000 class A-4 notes 'AAAsf;' Outlook Stable;

--$15,000,000 class B notes 'AAsf'; Outlook Stable;

--$11,000,000 class C notes 'Asf'; Outlook Stable.

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

KEY RATING DRIVERS

Non-diversified Portfolio: The 2014-1 is the sixth transportation-only equipment transaction. The significantly high concentration of transportation collateral in the pool reduces equipment and industry diversification.

Stronger Collateral: The concentration of small fleet collateral has decreased to 59.37% from 77.91% in 2013-2. This collateral has historically experienced higher losses than the large/medium fleet collateral.

Increased Obligor Concentrations: Obligor concentration has increased in 2014-1, with the top 20 obligors representing 18.3%, up from 10.2% in 2013-2. As a result, the obligor concentration analysis was the primary rating methodology for the 2014-1 transaction.

Improved Managed Portfolio Performance: GECC's managed transportation portfolio and securitizations exhibited volatility and asset deterioration from 2007?2009 but has demonstrated marked improvement since 2010.

Sufficient Credit Enhancement: Hard credit enhancement (CE) on the notes is 8.24%, 6.34% and 4.95%, for classes A, B, and C, respectively. Additionally, the notes benefit from excess spread, expected to be 3.46% per annum.

Stable Origination, Underwriting and Servicing Platform: GECC has demonstrated sufficient abilities as originator, underwriter and servicer, as evidenced by historical delinquency and loss performance of securitized trusts and the managed portfolio.

Integrity of Legal Structure: The legal structure of the transaction should provide that a bankruptcy of the trust would not impair the timeliness of payments on the securities.

RATING SENSITIVITIES

Unanticipated increases in the frequency of defaults and loss severity could produce loss levels higher than the current projected base case loss proxy and impact available loss coverage and multiples levels. Lower loss coverage could impact ratings and Rating Outlooks, depending on the extent of the decline in coverage. In Fitch's initial review of the transaction, the notes were found to have some sensitivity to a 1.5x and 2.5x increase of Fitch's base case loss expectation. Under 1.5x base case loss scenario, the notes show limited sensitivity to this stress and may result in limited downgrades. However, under the 2.5x base case loss scenario, the notes could potentially be downgraded by two or more rating categories.

Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'GE Equipment Transportation 2014-1 - 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);

--'Criteria for Rating U.S. Equipment Lease and Loan ABS' (Dec.19, 2013)

--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance' (April 17, 2012)

--'GE Equipment Transportation 2014-1 - Appendix' (June 9, 2014)

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. Equipment Lease and Loan ABS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=726362

Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=676496

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=833575

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

Sandro Scenga, +1 212-908-0278

Media Relations, New York

sandro.scenga@fitchratings.com

or

Primary Analyst

Joyce Fargas, +1-212-908-0824

Director

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Secondary Analyst

Thomas Kaiser, CPA, +1-312-368-3338

Associate Director

or

Committee Chairperson

Hylton Heard, +1-212-908-0214

Senior Director


Source: Fitch Ratings


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