|By Business Wire||
|July 14, 2014 04:41 PM EDT||
Fitch Ratings takes the following actions on various classes of GE Equipment Small Ticket L.L.C. Series 2013-1 (GE EST 2013-1):
Class A-2 affirmed at 'AAAsf'; Outlook Stable
Class A-3 affirmed at 'AAAsf'; Outlook Stable
Class A-4 affirmed at 'AAAsf'; Outlook Stable
Class B upgraded to 'AAAsf' from 'AAsf'; Outlook Stable
Class C upgraded to 'AAsf' from 'Asf'; Outlook revised to Positive from Stable.
KEY RATING DRIVERS
The upgrade of the class B and C notes reflect the growing Credit Enhancement (CE) available to the notes and now provide increased loss coverage to these classes. The affirmation of class A reflects the continued strong CE available. As of the June 2014 reporting period, the transaction has experienced 0.52% in cumulative net losses (CNL) which is within Fitch's initial proxy of 3.60%. Given the current amortization profile, Fitch utilized a base case proxy of 2.90% for the remaining pool during this review.
The Positive Outlook on class C reflects the possibility for positive rating actions in the next 12 to 18 months as losses are tracking inside of initial expectations and credit support is expected to continue to increase for both transactions. Fitch will continue to closely monitor the transactions and may take additional rating actions in the event of changes in performance and credit enhancement measures.
If Fitch utilized its initial proxy for 3.60% for the current pool, multiples for all three classes would compress but would still suggest upgrades on the class B and C notes. Additionally, Fitch tested the sensitivity to the credit given to the residuals. While this scenario had a greater impact on loss coverage to the classes, it would likely still have resulted in an upgrade of the subordinate notes. Initial Key Rating Drivers and Rating Sensitivities are further described in GE EST 2013-1's presale report published June 22, 2013.
Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'GE Equipment Small Ticket, L.L.C. Series 2013-1 - 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 April 17, 2012.
Additional information is available at 'www.fitchratings.com'
Applicable Criteria and Related Research:
--'Criteria for Rating U.S. Equipment Lease and Loan ABS'
(Dec. 19, 2013);
--'Global Structured Finance Rating Criteria' (May 20, 2014);
--'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' (April 17, 2012);
--'GE Equipment Small Ticket, L.L.C Series 2013-1' ( July 22, 2013);
--'GE Equipment Small Ticket, L.L.C Series 2013-1 - Appendix' (July 22, 2013).
Applicable Criteria and Related Research:
Criteria for Rating U.S. Equipment Lease and Loan ABS
Global Structured Finance Rating Criteria
Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions
GE Equipment Small Ticket, L.L.C., Series 2014-1 - Appendix
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