News Column

Fitch Affirms 9 and Upgrades 8 Classes of Ford Credit Auto Owner Trust

July 11, 2014

CHICAGO--(BUSINESS WIRE)-- As part of its ongoing surveillance, Fitch Ratings affirms nine and upgrades eight classes from the Ford Credit Auto Owner Trust (FCAOT) 2012-B, 2013-A, and 2013-C transactions as follows:

2012-B:

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

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

--Class B affirmed at 'AAAsf'; Outlook Stable;

--Class C upgraded to 'AAAsf' from 'AAsf'; Outlook revised to Stable from Positive;

--Class D upgraded to 'AAsf' from 'Asf'; Outlook Positive.

2013-A:

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

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

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

--Class B upgraded to 'AAAsf' from 'AAsf'; Outlook revised to Stable from Positive;

--Class C upgraded to 'AAsf' from 'Asf'; Outlook Positive;

--Class D upgraded to 'Asf' from 'BBBsf'; Outlook Positive.

2013-C:

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

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

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

--Class B upgraded to 'AAAsf' from 'AAsf'; Outlook Stable;

--Class C upgraded to 'AAsf' from 'Asf'; Outlook revised to Positive from Stable;

--Class D upgraded to 'Asf' from'BBBsf'; Outlook revised to Positive from Stable.

KEY RATING DRIVERS

The rating upgrades of the applicable classes in series 2012-B, 2013-A, and 2013-C transactions are a result of strong loss coverage levels under Fitch's stressed cash flow assumptions. The affirmations on the remaining notes in all three transactions reflect loss coverage levels consistent with current ratings. The transactions have continued to perform within Fitch's expectations. As of the June 2014 reporting period, 2012-B has experienced .53% in cumulative net losses(CNL), 2013-A has experienced CNL of .25%, and 2013-C has experienced CNL of .17%.

In all three transactions, the multiples for the subordinate notes were strong enough to warrant further consideration for upgrades. However, given the current pool factors and subordinate position in the waterfall, Fitch deemed further upgrades were not appropriate at this time. The Positive Outlooks on these five subordinate classes of notes reflect Fitch's view that the transactions will continue to perform well and may warrant a review for potentially positive rating actions in the next 12 to 18 months.

The ratings reflect the quality of Ford Motor Credit Company's (FMCC) retail auto loan originations, the sound financial and legal structure of the transaction, and the strength of the servicing provided by FMCC.

RATING SENSITIVITIES

Unanticipated increases in the frequency of defaults and loss severity could produce loss levels higher than the current projected base case loss proxies and impact available loss coverage and multiples levels for the transactions. Lower loss coverage could impact ratings and Rating Outlooks, depending on the extent of the decline in coverage.

In each review, base case loss proxies for the remaining pools were determined, and consistent with the initial rating sensitivities conducted, the proxies used for the remaining pools were augmented 1.5x and 2.5x. Moreover, the default timing curves for each transaction were redistributed for front, mid and back-ended default scenarios to stress the primary assumptions used.

At 1.5x and 2.5x, the multiples for all 17 classes of notes did compress but the impact was minimal given current enhancement levels. As such, continued strong performance and growing enhancement levels for all three transactions would result in continued stable ratings. Conversely, a material deterioration in performance would have to occur within the asset pools to have potential negative impact on the outstanding ratings.

Fitch's analysis of the Representations and Warranties (R&W) of FCAOT 2012-B, FCAOT 2013-A, and FCAOT 2013-C can be found in the following appendices: 'Ford Credit Auto Owner Trust 2012-B- Appendix', 'Ford Credit Auto Owner Trust 2013-A- Appendix', and 'Ford Credit Auto Owner Trust 2013-C- Appendix'. These R&Ws are compared to those of typical R&Ws for the asset class as detailed in the special report 'Representations, Warranties, and Enforcement Mechanisms in the Global Structured Finance Transactions' dated Apr. 17, 2012.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and related research:

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

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

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

--'Ford Credit Auto Owner Trust 2012-B'(April 16, 2012);

--'Ford Credit Auto Owner Trust 2012-B Appendix'(April 16, 2012);

--'Ford Credit Auto Owner Trust 2013-A'(Feb. 19, 2013).

--'Ford Credit Auto Owner Trust 2013-A Appendix'(Feb. 19, 2013).

--'Ford Credit Auto Owner Trust 2013-C'(July 22, 2013).

--'Ford Credit Auto Owner Trust 2013-C Appendix'(July 22, 2013).

Applicable Criteria and Related Research:

Rating Criteria for U.S. Auto Loan ABS

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

Global Structured Finance Rating Criteria

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

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

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

Ford Credit Auto Owner Trust 2012-B

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=718695

Ford Credit Auto Owner Trust 2012-B - Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=720293

Ford Credit Auto Owner Trust 2013-A (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=701653

Ford Credit Auto Owner Trust 2013-A -- Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=701687

Ford Credit Auto Owner Trust 2013-C (US ABS)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=713976

Ford Credit Auto Owner Trust 2013-C -- Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=714315

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=839170

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

Andrew Tinari, +1-312-368-3127

Analyst

Fitch Ratings, Inc.

70 West Madison Street

Chicago, IL 60602

or

Committee Chairperson

Du Trieu, +1-312-368-2091

Senior Director

or

Media Relations

Sandro Scenga, +1 212-908-0278 (New York)

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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