Fitch Affirms GMF Floorplan Owner Revolving Trust, Series 2015-1; Outlook Stable
OREANDA-NEWS. As part of its ongoing surveillance, Fitch Ratings has affirmed five classes of the GMF Floorplan Owner Revolving Trust (GFORT), Series 2015-1 as follows:
-- Class A-1 at 'AAAsf'; Outlook Stable;
-- Class A-2 at 'AAAsf'; Outlook Stable;
-- Class B at 'AAsf'; Outlook Stable;
-- Class C at 'Asf'; Outlook Stable;
-- Class D at 'BBBsf'; Outlook Stable.
KEY RATING DRIVERS
Quality of Wholesale Receivables: 85.6% of the receivables backing the outstanding series are floorplan loans backing new vehicles. Aging distribution remains strong, with only 3.5% of vehicle inventory aged past 270 days as of March 2016.
Adequate Dealer Diversification: The top 25 dealers in the trust account for 25% of the trust as of YE 2015. Dealers are subject to concentration limits mitigating the risk of individual dealer defaults and losses. Exposure to individual vehicle types, manufacturers and segments is mitigated by concentration limits in place.
Strength of Dealer Network: Based on a review of dealer financial metrics and GFORT's internal dealer credit classifications, the financial health of GMF's dealer network in 2016 is viewed as stable, with the majority of dealers profitable.
Stable Performance: GFORT is experiencing consistent performance trends, including stable monthly payment rates (MPRs), asset yield, low agings, and minimal dealer defaults and trust losses.
Sufficient Credit Enhancement: 2015-1 benefits from overcollateralization, subordination, and a reserve account fully funded at 0.86% of the nominal liquidation amount. Structural features such as early amortization triggers mitigate risks of dealer defaults or manufacturer bankruptcies.
Consistent Origination and Servicing: GMF demonstrates adequate abilities as originator, underwriter and servicer, as evidenced by the historical delinquency and loss performance of GFORT.
Legal Analysis: The legal structure of the transaction provides that a bankruptcy of GMF would not impair the timeliness of payments on the securities.
RATING SENSITIVITIES
Unanticipated increases in the frequency of defaults and loss severity could produce loss levels higher than the current projected base case loss proxies and impact available loss coverage and multiples levels for the transactions. Lower loss coverage could affect the ratings and Rating Outlooks depending on the extent of the decline in coverage.
In Fitch's initial review of the transactions, the notes were found to have limited sensitivity to a 1.5x and 2.5x increase of Fitch's base case loss expectations. To date, the transactions have exhibited strong performance with losses well within Fitch's initial expectations, with rising loss coverage and multiple levels. As such, a material deterioration in performance would have to occur within the asset pools to have potential negative impact on the outstanding ratings.
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