Fitch Rates AT&T Receivables Funding, LLC

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings assigns the following rating to AT&T Receivables Funding, LLC's June 2015 investment:

--$1,048,558,322.41 June 2015 investment 'Asf'; Outlook Stable.

KEY RATING DRIVERS

Fitch's rating is based on the underlying receivables pool, available credit enhancement (CE), AT&T's underwriting and servicing capabilities, and the transaction's legal and cash flow structures.

RATING SENSITIVITIES

Unanticipated increases in the frequency of defaults or chargeoffs on customer accounts could produce loss levels higher than the base case and would likely result in declines of CE and remaining loss coverage levels available to the investments. Decreased CE may make certain ratings on the investments susceptible to potential negative rating actions, depending on the extent of the decline in coverage. Hence, Fitch conducts sensitivity analysis by stressing a transaction's initial base case charge-off assumption by 1.5x and 2.5x and examining the rating implications. The 1.5x and 2.5x increase of the base case account chargeoffs represents moderate and severe stresses, respectively, and are intended to provide an indication of the rating sensitivity of the notes to unexpected deterioration of a trust's performance.

During the sensitivity analysis, Fitch examines the magnitude of the multiplier compression by projecting the expected cash flows and loss coverage levels over the life of investments under higher than the initial base case chargeoff assumptions. Fitch models cash flows with the revised chargeoff estimates while holding constant all other modeling assumptions.

Under the 1.5x base case stress scenario, the multiple for the investments decreases from the initial level to 2.23x, corresponding to a one category downgrade to 'BBBsf'. Under the 2.5x base case stress scenario, the multiple for the investments decreases from the initial level to 1.34x, corresponding to a two category downgrade to 'BBsf'.

Fitch also stressed the timing of the account chargeoffs, modeling a front-, mid-, and back- loaded timing of account chargeoffs. The front-loaded timing curve is the most stressful and could result in a three category downgrade to 'Bsf', while the mid-loaded curve could result in a one category downgrade to 'BBBsf'.

DUE DILIGENCE USAGE

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

The publication of a RW&Es appendix is not required for this transaction.

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

EMEA Consumer ABS Rating Criteria (pub. 24 Jun 2014)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750766

Global Structured Finance Rating Criteria (pub. 31 Mar 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

Additional Disclosures

Dodd-Frank Rating Information Disclosure Formhttps://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=987104

Solicitation Statushttps://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=987104

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

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View source version on businesswire.com: http://www.businesswire.com/news/home/20150626005804/en/

Fitch Ratings
Primary Analyst
Melvin Zhou, +1-212-908-0503
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Harry Kohl, +1-212-908-0837
Associate Director
or
Committee Chairperson
Tracy Wan, +1-212-908-9171
Senior Director
or
Media Relations, New York
Sandro Scenga, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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