DBRS Publishes Updated Legal Criteria for Rating U.S. Structured Finance

DBRS has today published an updated methodology entitled “Legal Criteria for U.S. Structured Finance” (the Methodology). The Methodology outlines DBRS’s approach with respect to legal criteria for rating securitizations issued in the United States.

The changes to the Methodology include the following:
-- Conforming language to current DBRS methodological style;
-- Adding a conforming reference to the applicability of criteria to the highest rating categories;
-- Clarification regarding (1) potential linkage to sponsor where true sale or non-consolidation is not achieved and (2) expectations for legal opinions;
-- Inclusion of considerations that address the recent 2016 Lehman Bros “flip-clause” case; and
-- Revised first and second level thresholds for derivative counterparty criteria to A/R-1(low) and BBB/R-2 (middle) from A (high)/R-1 (middle) and BBB (high)/R-2 (high), respectively.

This update supersedes the previous version published in July 2014. While certain details have been clarified in the Methodology, DBRS does not deem the changes to be material and has determined that no ratings will be changed as a result of this update.

Notes:
DBRS rating definitions and the terms of used of such rating are available at www.dbrs.com.

DBRS’s methodologies and criteria are available at www.dbrs.com or contact us at info@dbrs.com.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.