DBRS Publishes Updated Methodology for Rating U.S. Rental Car Securitizations

DBRS, Inc. (DBRS) has today published an updated methodology entitled, “Rating U.S. Rental Car Securitizations” (the Methodology). The Methodology provides an analytical framework for reviewing rental car securitizations in the United States.

The Methodology provides a discussion of the following:
-- Quality of management and financial condition;
-- Operational and servicing capabilities;
-- Fleet composition and purchase agreements;
-- Capital structure, proposed ratings and credit enhancement;
-- Liquidation analysis;
-- Legal structure and opinions.

The Methodology’s updates include:
-- Modification of the reference to three levels of credit enhancement - lowest, intermediate and highest - used to evaluate proposed credit enhancement and clarification of transaction parameters used to evaluate proposed credit enhancement.
-- Modification of the sublimit with respect to the percentage of BBB (low)-rated program manufacturers that can receive the lowest credit enhancement level.
-- In certain circumstances, unsecured receivables from certain non-investment-grade manufacturers may be included in the borrowing base.
-- Clarifying the timing for vehicle liquidation during the liquidation period.
-- Providing for the ability to consider the use of separate depreciation rates during the stay and liquidation periods.
-- Modifying the approach for evaluating losses for vehicles subject to casualty to more accurately reflect transaction exposure in a liquidation scenario.
-- Moving the originator and servicer review sections to their stand-alone methodologies entitled “Operational Risk Assessment for U.S. ABS Originators” and “Operational Risk Assessment for U.S. ABS Servicers,” respectively.

DBRS has also published its new stressed forward interest rate curves per its new “Unified Interest Rate Model for U.S. Rental Car ABS Transactions” that sets forth a consistent platform for the application of interest rate stresses applied across all U.S. rental car asset-backed security ratings.

The Methodology, effective as of the date of this press release, supersedes any previous methodologies. While DBRS considers this update to be a material change because of the significant level of new detail, the modifications to evaluating credit enhancement levels and the treatment of variables during a liquidation period, it remains consistent with methods generally used by DBRS to assess fleet exposure in the United States. Accordingly, this methodology release will not result in any rating changes or other rating actions on outstanding transactions.

Notes:
DBRS criteria and methodologies are publicly available on its website www.dbrs.com under Methodologies.

For more information on ratings for U.S. auto lease securitizations, visit www.dbrs.com or contact us at info@dbrs.com.