MRO Magazine

Fitch Takes Various Rating Actions on CNH Equipment Trust 2014-A


December 8, 2015
By Business Wire News

CHICAGO

Fitch Ratings takes various rating actions on CNH Equipment Trust 2014-A. A full list of rating actions follows at the end of this rating action commentary.

KEY RATING DRIVERS

The affirmations of the class A notes and the upgrade to the class B notes reflect loss coverage levels consistent with the ratings of ‘AAAsf’ and ‘AAsf’, respectively. The Stable Outlook for the class A notes reflects Fitch’s expectation for loss coverage and credit enhancement to continue to improve as the transaction amortizes. Maintaining the Positive Outlook for the class B notes reflects the possibility for positive rating actions in the next 12 to 18 months.

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, which would impact available loss coverage. 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 limited sensitivity to 1.5x and 2.5x higher of Fitch’s base case loss expectation. Initial key rating drivers and rating sensitivities are further described in the new issue report published Feb. 10, 2014.

To date, the transaction has exhibited strong performance with losses within Fitch’s initial expectations with rising loss coverage and multiple levels. As such, continued strong performance for the transaction would most likely result in continued stable ratings. Conversely, a material deterioration in performance would have to occur within the asset pool to have potential negative impact on the outstanding ratings.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action.

Fitch’s analysis of the Representations and Warranties (R&W) of CNH 2014-A can be found in ‘CNH Equipment Trust 2014-A – Appendix’. These R&W 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 June 12, 2015.

Fitch has taken the following rating actions on CNH Equipment Trust 2014-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 ‘AAsf’ from ‘Asf’; Outlook Positive.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Rating U.S. Equipment Lease and Loan ABS (pub. 03 Dec 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874138

Criteria for Servicing Continuity Risk in Structured Finance (pub. 17 Jul 2014)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=752340

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Rating Criteria for Structured Finance Servicers (pub. 23 Apr 2015)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864375

Related Research

CNH Equipment Trust 2014-A — Appendix
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=735418

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form
https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=996250

Solicitation Status
https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=996250

Endorsement Policy
https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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
Surveillance Analyst:
Andrew Tinari, +1-312-368-3127
Analyst
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson:
Hylton Heard, +1-212-908-0214
or
Media Relations:
Sandro Scenga, +1-212-908-0278
New York
sandro.scenga@fitchratings.com