Fitch Rates ARI Fleet Lease Trust 2015-A

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings assigns the following ratings and Rating Outlooks to the ARI Fleet Lease Trust 2015-A notes:

--$193,000,000 class A-1 notes 'F1+sf';

--$276,000,000 class A-2 notes 'AAAsf'; Outlook Stable;

--$85,448,000 class A-3 notes 'AAAsf'; Outlook Stable.

KEY RATING DRIVERS

Strong Credit-Quality Obligors: A majority of the pool (65.01%) is publicly rated by a nationally recognized statistical rating organization (NRSRO) with 40.37% of the pool carrying an investment-grade rating. The weighted average rating of the rated pool is 'BBB-'. Fitch conservatively assumes 'B' for the unrated obligors.

Strong Portfolio Diversification: The portfolio remains well diversified by obligor, compared with 2014-A. The top five obligors by lease balance represent 14.35% versus 14.46% in 2014-A; however, top industry concentrations increased to 11.57%.

Minimal Residual Risk: The 2015-A leases are all open-ended, meaning the lessees bear virtually all residual risk. Therefore, the trust is only exposed to wholesale market risk in the event of an obligor default. Even if default occurs, past vehicle dispositions have largely resulted in gains comparable to book value.

Sufficient Credit Enhancement: Initial hard credit enhancement (CE; 8.35%) decreased from the 2014-A transaction (8.50%), and excess spread also declined. However, target CE remains at 13.75%. Total proposed CE is sufficient to support Fitch's stressed default and loss assumptions, consistent with the expected ratings of 'F1+sf/AAAsf'.

Low Delinquency and Loss History: ARI's historical managed portfolio and prior transaction's delinquency and loss experience are low, even during periods marked by elevated levels in other consumer and commercial asset classes.

Quality Origination, Underwriting and Servicing: Fitch believes ARI to be a capable originator, underwriter and servicer, as evidenced by historical delinquency and loss performance of securitized trusts and the managed portfolio.

RATING SENSITIVITIES

Unanticipated increases in the frequency of defaults and transaction fees, or decreases in recovery rates, could produce loss levels higher than the base case and could result in potential rating actions on the notes. Fitch evaluated the sensitivity of the ratings to assigned to ARI FLT 2015-A to increased default levels and servicing fees, as well as lower recovery rates for the truck component of the collateral pool, over the life of the transaction. Fitch's analysis found that the transaction displays relatively little sensitivity to increased servicing fees and decreased truck recovery rates. In both cases, the notes showed rating sensitivity of only one rating category. The transaction shows significantly more sensitivity to higher default rates, which Fitch stressed by assuming all unrated obligors carry a 'CCC' rating.

Key Rating Drivers and Rating Sensitivities are further described in the presale report dated April 9, 2015. Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'ARI Fleet Lease Trust 2015-A - 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 October 31, 2014.

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:

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

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

--'Global Rating Criteria for Corporate CDOs' (July 2014);

--'Counterparty Criteria for Structured Finance and Covered Bonds' (May 2014);

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

--'Criteria for Interest Rate Stresses in Structured Finance Transactions' (January 2015).

--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' (October 31, 2014).

--'ARI Fleet Lease Trust 2015-A' (April 9, 2015);

--'ARI Fleet Lease Trust 2015-A - Appendix' (April 9, 2015).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria - Effective from 4 August 2014 to 31 March 2015

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

Criteria for Rating U.S. Auto Lease ABS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=746763

Global Rating Criteria for Corporate CDOs

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=753057

Counterparty Criteria for Structured Finance and Covered Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

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=983412

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:
Thomas Kaiser, CPA, +1-312-368-3338
Associate Director
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst:
Margaret Rowe, +1-312-368-3167
Director
or
Committee Chairperson:
Hylton Heard, +1-212-908-0214
Senior Director
or
Sandro Scenga, +1-212-908-0278
Media Relations, New York
[email protected]

Source: Fitch Ratings

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