Fitch Affirms Volvo Financial Equipment LLC, Series 2015-1

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed the following classes of Volvo Financial Equipment LLC, Series 2015-1:

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

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

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

--Class B at 'AAsf'; Outlook to Positive from Stable;

--Class C at 'Asf'; Outlook to Positive from Stable.

Certificates not rated.

KEY RATING DRIVERS

The affirmations of all outstanding classes reflect loss coverage levels consistent with the current ratings. As of the February 2016 reporting period, cumulative net losses totaled 40 basis points, and as such, the transaction is extrapolating below Fitch's initial base case loss proxy. 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. The Outlook revision to Positive for classes B and C 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 on defaulted receivables could produce loss levels higher than the base case and could result in potential rating actions on the notes. At initial rating, Fitch evaluated the sensitivity of the ratings assigned to VFET 2015-1 to increased cumulative net losses (CNLs) over the life of the transaction. Fitch's analysis found that the transaction displays some sensitivity to increased defaults and CNL, showing a potential downgrade of one category under Fitch's moderate (1.5x base case loss) scenario. The notes could experience downgrades of up to three rating categories, although still remain investment grade, under Fitch's severe (2.5x base case loss) scenario. Initial key rating drivers and rating sensitivities are further described in the new issue report published March 5, 2015.

DUE DILIGENCE USAGE

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

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 Dec 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=875586

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Related Research

Volvo Financial Equipment LLC, Series 2015-1 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863287

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=999853

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=999853

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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160223006308/en/

Fitch Ratings, Inc.
Surveillance Analyst
Andrew Tinari
Analyst
+1-312-368-3127
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Committee Chairperson
Hylton Heard
+1-212-908-0214
or
Media Relations
Hannah James, + 1-646-582-4947
[email protected]

Source: Fitch Ratings

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