Fitch to Rate Hyundai Auto Lease Securitization Trust 2015-B; Issues Presale

NEW YORK--(BUSINESS WIRE)-- Fitch Ratings expects to assign the following ratings and Rating Outlooks to the asset-backed notes issued by Hyundai Auto Lease Securitization Trust 2015-B:

--$138,000,000 class A-1 asset-backed notes 'F1+sf';

--$111,000,000 class A-2a asset-backed notes 'AAAsf'; Outlook Stable;

--$111,000,000 class A-2b asset-backed notes 'AAAsf'; Outlook Stable;

--$275,000,000 class A-3 asset-backed notes 'AAAsf'; Outlook Stable;

--$83,110,000 class A-4 asset-backed notes 'AAAsf'; Outlook Stable;

--$29,650,000 class B asset-backed notes 'AAsf'; Outlook Stable.

KEY RATING DRIVERS

Stable Collateral Quality: The pool is consistent with that of recently issued HALST transactions, with a WA FICO score of 741 and 8 months of seasoning. The undiscounted residual value (RV) comprises 63.07% of the securitization value (SV) and the pool exhibits a diversified mix of vehicle models.

Adequate CE Structure: Initial hard CE will be 16.95% and 13.50% for the class A and B notes, respectively, growing to 18.95% and 15.50% of the initial SV, consistent with 2015-A. Initial excess spread is expected to be 3.56%. Loss coverage is adequate to support Fitch's 'AAAsf' and 'AAsf' stressed assumptions.

Moderating Loss Performance: Credit and residual losses on HCA's portfolio have begun to increase from the low levels seen in 2010-2011, but remain below peaks used to derive the base case. The increases resulted from rapid origination growth and a stabilizing wholesale used vehicle market. Fitch's credit loss proxy is 1.15% of the SV, and RV loss proxy 13.40%.

Evolving Wholesale Market: The U.S. wholesale vehicle market has been normalizing following strong performance in recent years. Fitch expects that increasing off-lease vehicle supply and pressure from increased production levels will lead to decreased residual realizations during the life of the transaction.

Experienced Origination/Underwriting/Servicing: Fitch believes HCA to be a capable originator, underwriter, and servicer, as evidenced by historical portfolio delinquency and loss experience and securitization performance.

Legal Structure Integrity: The legal structure of the transaction should provide that a bankruptcy of HCA would not impair the timeliness of payments on the securities.

RATING SENSITIVITIES

Unanticipated decreases in the value of returned vehicles and/or increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than the base case. This would likely result in declines of credit enhancement and loss coverage levels available to the notes. Hence, Fitch conducts sensitivity analyses by increasing the transaction's initial base case RV and credit loss assumptions and examining the rating implications on all classes of issued notes. The increases to the base case losses are applied such that they represent moderate (1.5x) and severe (2.5x) stresses, and are intended to provide an indication of the rating sensitivity of notes to unexpected deterioration of a trust's performance.

DUE DILIGENCE USAGE

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

Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in the reports titled ' Hyundai Auto Lease Securitization Trust 2015-B -- 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 March 26, 2015.

Additional information is available at www.fitchratings.com.

Hyundai Auto Lease Securitization Trust 2015-B (US ABS)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=866511

Applicable Criteria

Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds (pub. 19 Dec 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=838868

Criteria for Rating U.S. Auto Lease ABS (pub. 24 Apr 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=864500

Global Structured Finance Rating Criteria (pub. 31 Mar 2015)

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

Additional Disclosures

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=985447

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/20150528005892/en/

Fitch Ratings
Primary Analyst
Margaret Rowe
Director
+1-312-368-3167
Fitch Ratings, Inc.
70 West Madison
Chicago, IL 60602
or
Secondary Analyst
Puloma Mukherjee
Associate Director
+1-212-908-9131
or
Committee Chairperson
Hylton Heard
Senior Director
+1-212-908-0214
or
Media Relations:
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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