Fitch Rates GreatAmerica Leasing Receivables Funding, L.L.C., Series 2014-1

posted by Fitch Ratings on Thursday, February 27, 2014

 

CHICAGO--(BUSINESS WIRE)--Fitch Ratings assigns the following ratings to the GreatAmerica Leasing Receivables Funding, L.L.C., Series 2014-1 notes:

--$102,143,000 class A-1 'F1+sf';
--$99,237,000 class A-2 'AAAsf'; Outlook Stable;
--$119,353,000 class A-3 'AAAsf'; Outlook Stable;
--$73,310,000 class A-4 'AAAsf'; Outlook Stable;
--$16,092,000 class B 'AAsf'; Outlook Stable;
--$13,410,000 class C 'Asf'; Outlook Stable.

Fitch's stress and rating sensitivity analysis are discussed in the presale report titled 'GreatAmerica Leasing Receivables Funding, L.L.C., Series 2014-1 ', dated Feb. 18, 2014, which is available on Fitch's web site. The presale report details how Fitch addresses the key rating drivers summarized below.

KEY RATING DRIVERS

High Concentration of Copiers/Printers: 69.5% of series 2014-1 consists of copiers/printers. This concentration is consistent with but slightly down from the prior three transactions, which included 71%-76% of this collateral type. Despite the high concentration, copiers/printers have historically performed better than other equipment types within GreatAmerica's portfolio.

Improving Asset Performance: GreatAmerica's managed static pool data have experienced improved loss performance for more recent vintages of the managed portfolio. Furthermore, all transactions issued by GreatAmerica have experienced cumulative net losses (CNLs) inside of Fitch's initial expectations.

Sufficient Credit Enhancement: All classes benefit from a cash reserve account and overcollateralization (OC). In total, initial hard credit enhancement (CE) for the class A, B, and C notes is 13.35%, 9.75%, and 6.75%, respectively. These levels are down slightly from 2013-1. Additionally, all classes benefit from 5.80% in booked residuals.

Quality of Origination, Underwriting, and Servicing: GreatAmerica has demonstrated adequate 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 GreatAmerica 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 CNL levels higher than the base case and would likely result in declines of CE and remaining loss coverage levels available to the notes. Decreased CE may make certain note ratings susceptible to potential negative rating actions, depending on the extent of the decline in coverage.

A similar negative impact on loss coverage can also be expected from a lower than expected residual realization rate on the leases. Hence, Fitch conducts a sensitivity analysis by eliminating any residual realizations benefit and stressing a transaction's initial base case CNL assumption by 1.5x as well as examining the rating implications on all classes of issued notes. These stresses are intended to provide an indication of the rating sensitivity of notes to unexpected deterioration of a trust's performance. The elimination of the residual realizations benefit, while assuming the base case loss proxy, represents a moderate stress and could result in a downgrade of one rating category for the subordinate notes. Eliminating residual realizations and a 1.5x increase of the base case CNL represents a severe stress and could result in a downgrade to the notes of one to two rating categories.

Key Rating Drivers and Rating Sensitivities are further described in the presale report dated Feb. 18, 2014. Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'GreatAmerica Leasing Receivables Funding, L.L.C., Series 2014-1 '. 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.

Key Rating Drivers and Rating Sensitivities are further described 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.

Applicable Criteria and Related Research:

--'Criteria for Rating U.S. Equipment Lease and Loan ABS' (Dec 19, 2013);
-- 'Global Structured Finance Rating Criteria' (May 24, 2013);
-- 'GreatAmerica Leasing Receivables Funding, L.L.C., Series 2014-1 Presale Report' (Feb. 18, 2014);
-- 'GreatAmerica Leasing Receivables Funding, L.L.C., Series 2014-1 Presale Report- Appendix' (Feb. 18, 2014);
--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' (April 17, 2012);
--'Structured Finance Tranche Thickness Metrics' (July 29, 2011).

Applicable Criteria and Related Research:

Criteria for Rating U.S. Equipment Lease and Loan ABS
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=726362

Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

GreatAmerica Leasing Receivables Funding, L.L.C., Series 2014-1 Presale
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=736776 

GreatAmerica Leasing Receivables Funding, L.L.C., Series 2014-1 -- Appendix
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=736798 

Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions -- Amended
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=676496 

Structured Finance Tranche Thickness Metrics
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=646951 

Additional Disclosure

Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=821931 

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