Fitch Rates Honda Auto Receivables 2015-2 Owner Trust

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has assigned the following ratings and Rating Outlooks to the notes issued by Honda Auto Receivables 2015-2 Owner Trust listed below:

--$356,050,000 class A-1 'NR';

--$376,000,000 class A-2 'AAAsf'; Outlook Stable;

--$458,000,000 class A-3 'AAAsf'; Outlook Stable;

--$166,000,000 class A-4 'AAAsf'; Outlook Stable.

KEY RATING DRIVERS

Strong Credit Quality: The credit quality of 2015-2, as measured by the weighted average (WA) Fair Isaac Corp. (FICO) score of 759 and internal credit score tiering, is consistent with recent pools. New vehicles total 91.9%, and the WA seasoning is 13.4 months.

Consistent Credit Enhancement Structure: The cash flow distribution is a sequential-pay structure. Initial hard credit enhancement (CE) is 2.75% (subordination of 2.50% and a 0.25% reserve). A yield supplement account (YSA) increases the effective WA APR and, thus, excess spread (XS), which totals 4.25% in 2015-2.

Strong Portfolio/Securitization Performance: Losses on AHFC's portfolio and 2010-2014 securitizations have been low historically and have remained well below peak levels seen in 2008 due to stronger quality originations and healthy used vehicle values, which have supported higher recovery rates. Fitch's base case loss proxy remains at 90 bps; however, pool-factor projections of recent HAROT securitizations suggest 2015-2 could perform within a 0.30%-0.35% range, assuming stable macro-economic conditions.

Stable Corporate Health: Fitch rates AHFC 'F1' and its parent, Honda, 'F1/A'/Stable. AHFC has recorded positive corporate financial results in recent years, while the overall health of Honda has remained strong.

Consistent Origination/Underwriting/Servicing: AHFC demonstrates adequate capabilities as originator, underwriter and servicer, as evidenced by historical portfolio delinquency and loss experience and securitization performance. Fitch deems AHFC capable to service 2015-2.

Legal Structure Integrity: The legal structure of the transaction should provide that a bankruptcy of AHFC 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. This in turn could result in potential rating actions on the notes. Fitch evaluated the sensitivity of the ratings assigned to all classes of 2015-2 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 no expected impact on the rating of the notes under Fitch's moderate (1.5x base case loss) scenario. The notes could experience a downgrade of one rating category under Fitch's severe (2.5x base case loss) scenario.

Key Rating Drivers and Rating Sensitivities are further described in the presale report dated May 11, 2015. Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in Honda Auto Receivables 2015-2 Owner Trust (May 2015) -- 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 Mar. 26, 2015.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (March 2015);

--'Rating Criteria for U.S. Auto Loan ABS' (April 2015);

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

--'Honda Auto Receivables 2015-2 Owner Trust - Appendix' (May 2015).

Applicable Criteria and Related Research:

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864268

Rating Criteria for US Auto Loan ABS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863979

Structured Finance Tranche Thickness Metrics

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=646951

Honda Auto Receivables 2015-2 Owner Trust - Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=865908

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=985034

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/20150520006249/en/

Fitch Ratings
Primary Analyst
Puloma Mukherjee
Associate Director
+1-212-908-9131
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Yun Tian
Associate Director
+1-212-908-1307
or
Committee Chairperson
Tracy Wan
Senior Director
+1-212-908-1171
or
Media Relations:
Sandro Scenga, +1-212-908-0278
[email protected]

Source: Fitch Ratings

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