News Column

Fitch Rates Honda Auto Receivables 2014-3 Owner Trust

August 20, 2014

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings assigns the following ratings and Rating Outlooks to the notes issued by Honda Auto Receivables 2014-3 Owner Trust listed below:

--$256,400,000 class A-1 'F1+sf';

--$299,300,000 class A-2 'AAAsf'; Outlook Stable;

--$334,300,000 class A-3 'AAAsf'; Outlook Stable;

--$110,000,000 class A-4 'AAAsf'; Outlook Stable.

KEY RATING DRIVERS

Strong Credit Quality: The credit quality of 2014-3, as measured by the weighted average (WA) Fair Isaac Corp. (FICO) score of 757 and internal credit score tiering, is consistent with prior 2013-2014 pools. New vehicles total 90.3% and seasoning is 13.1 months, in line with prior transactions.

Consistent Credit Enhancement: The cash flow distribution is a sequential-pay structure. Initial hard credit enhancement (CE) is 2.75% (2.50% subordination and a 0.25% reserve). A yield supplement account (YSA) boosts the effective WA APR, in turn resulting in excess spread (XS) of 2.46% in 2014-3.

Strong Portfolio/Securitization Performance: Losses on AHFC's portfolio and 2010-2014 securitizations have remained well below peak levels seen in 2008 due to strong quality originations and healthy used vehicle values which have supported higher recovery rates.

Stable Corporate Health: Fitch rates AHFC 'F1' and its parent Honda 'F1/A' with a Stable Outlook. AHFC has recorded positive corporate financial results in recent years, while the overall health of Honda is consistently strong.

Consistent Origination/Underwriting/Servicing: AHFC demonstrates adequate capabilities as originator, underwriter, and servicer, as evidenced by historical portfolio and securitization delinquency and loss performance.

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

RATING SENSITIVITIES

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 rating actions on the notes. Fitch evaluated the sensitivity of the ratings assigned to all classes of 2014-3 to increased losses over the life of the transaction. Fitch's analysis found that the notes display limited sensitivity to increased defaults and losses, showing no expected impact on the rating of the notes under Fitch's moderate (1.5x base case loss) scenario. The notes could experience a downgrade of one rating category under Fitch's severe (2.5x base case loss) scenario.

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. Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'Honda Auto Receivables 2014-3 Owner Trust - Appendix'. These R&Ws are compared to those of typical R&W for the asset class as detailed in the special report 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' dated April 17, 2012.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

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

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

--'Structured Finance Tranche Thickness Metrics' (July 2011);

--'Honda Auto Receivables 2014-3 Owner Trust - Appendix' (Aug 2014).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

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

Honda Auto Receivables 2014-3 Owner Trust -- Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=757647

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=854694

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

Puloma Mukherjee, +1 212-908-9131

Associate 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

Bradley Sohl, +1 212-908-0792

Senior Director

or

Media Relations:

Sandro Scenga, +1 212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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