Fitch Rates GreatAmerica Leasing Receivables Funding, L.L.C., Series 2016-1

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings assigns the following ratings to the GreatAmerica Leasing Receivables Funding, L.L.C., Series 2016-1 notes:

--$105,951,000 class A-1 'F1+sf';

--$111,200,000 class A-2 'AAAsf'; Outlook Stable;

--$115,925,000 class A-3 'AAAsf'; Outlook Stable;

--$90,249,000 class A-4 'AAAsf'; Outlook Stable;

--$18,135,000 class B 'AAsf'; Outlook Stable;

--$13,124,000 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 2016-1', dated Feb. 4, 2016, which is available on Fitch's website. The presale report details how Fitch addresses the key rating drivers summarized below.

KEY RATING DRIVERS

High Concentration of Copiers/Printers: 67.0% of 2016-1 consists of office imaging (copier/printers), which is down from the prior five transactions that included 67%-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. All GreatAmerica securitizations have experienced cumulative net losses (CNLs) within Fitch's initial expectations for each transaction.

Sufficient Credit Enhancement (CE): All classes benefit from a cash reserve account and overcollateralization (OC). Total initial hard CE for the class A, B, and C notes is 12.30%, 8.50%, and 5.75%, respectively. These levels are down from 2015-1 and 2014-1. Additionally, all classes benefit from 6.17% in booked residuals. The structure is able to support Fitch's base case CNL of 2.55%.

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 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 increased losses over the life of the transaction. Fitch's analysis found that the notes display limited sensitivity to increased defaults and losses, showing limited impact on the rating of the notes under Fitch's moderate (0% residual value [RV]) scenario. The notes could experience downgrades of up to two rating categories under Fitch's severe (1.5x base case loss and 0% RV) scenario.

DUE DILIGENCE USAGE

Additionally, Fitch was provided with third-party due diligence information from KPMGLLP. The third-party due diligence focused on comparing or recalculating certain information with respect to 150 receivables. Fitch considered this information in its analysis and the findings did not have an impact on our analysis/conclusions. A copy of the ASB Due Diligence Form-15E received by Fitch in connection with this transaction may be obtained through the link contained on the bottom of this rating action commentary (RAC).

Key Rating Drivers and Rating Sensitivities are further described in the presale report dated Feb. 4, 2016. 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 2016-1- 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 June 12, 2015.

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

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

GreatAmerica Leasing Receivables LLC Series 2016-1 - Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=877486

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=999663

ABS Due Diligence Form 15E 1

https://www.fitchratings.com/creditdesk/press_releases/content/ridf15E_frame.cfm?pr_id=999663&flm_nm=15e_999663_1.pdf

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=999663

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/20160218006347/en/

Fitch Ratings
Primary Analyst
Thomas Kaiser, CPA, CFA
Associate Director
+1 312-368-3338
Fitch Ratings, Inc
70 W Madison
Chicago, IL 60602
or
Secondary Analyst
Du Trieu
Senior Director
+1 312-368-2091
or
Committee Chairperson
Kevin Corrigan
Senior Director
+1 212-908-0156
or
Media Relations:
Hannah James, + 1-646-582-4947
[email protected]

Source: Fitch Ratings

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