by Fitch Ratings on Tuesday, December 03, 2013
Fitch Ratings Upgrade
Fitch Ratings-Chicago-03 December 2013: Fitch Ratings has taken the following actions on GreatAmerica Leasing Receivables Funding, LLC Series 2012-1 (GALC 2012-1).
--Class A-3 affirmed at 'AAAsf'; Outlook Stable;
--Class A-4 affirmed at 'AAAsf'; Outlook Stable;
--Class B upgraded to 'AAAsf' from 'AAsf'; Outlook to Stable from Positive;
--Class C upgraded to 'AAsf' from 'Asf'; Outlook Positive.
KEY RATING DRIVERS
The affirmation of the class A notes and the upgrade of the class B and C notes reflect strong performance to date with 56 bps in net losses which is tracking below Fitch's initial expectations. Furthermore, loss coverage levels have improved due to increased credit enhancement (CE) and are consistent with the ratings. The Outlook for class C remains Positive, reflecting the potential for further positive rating actions on the class.
Fitch will continue to monitor this transaction and may take additional rating actions in the event of changes in performance and credit enhancement measures.
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 Fitch's base case loss expectations.
To date, the transaction has exhibited strong performance with losses within Fitch's initial expectations, resulting in rising CE and loss coverage levels. As such, continued strong performance for this transaction would result in stable to positive rating actions. Conversely, a material deterioration in performance would have to occur within the asset pool to have potential negative impact on the outstanding ratings.
Initial key rating drivers and rating sensitivities are further described in the presale report published March 2012. 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 2012-1 - 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 April 17, 2012.
Thomas Kaiser, CPA
Fitch Ratings, Inc. 70 W Madison Street
Chicago, IL 60602
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