OREANDA-NEWS. S&P Global Ratings today assigned its ratings to United Auto Credit Securitization Trust 2016-2's $150.415 million automobile receivables-backed notes series 2016-2 (see list).

The note issuance is an asset-backed securities transaction backed by subprime auto loan receivables.

The ratings reflect:The availability of approximately 58.7%, 51.3%, 42.6%, 33.2%, and 27.6% credit support for the class A, B, C, D, and E notes, respectively, based on stressed break-even cash flow scenarios (including excess spread). These credit support levels provide coverage of approximately 2.90x, 2.50x, 2.05x, 1.55x, and 1.27x our expected net loss range of 19.50%-20.50% for the class A, B, C, D, and E notes, respectively. The likelihood of timely interest and principal payments by the assumed legal final maturity dates under stressed cash flow modeling scenarios that are appropriate for the assigned ratings. Our expectation that under a moderate ('BBB') stress scenario, the ratings on the class A, B, and C notes would not decline by more than one rating category and the rating on the class D notes would not decline by more than two rating categories. Under this scenario, the preliminary 'BB (sf)' rated class E notes would not decline by more than two rating categories in the first year, but would ultimately default in a 'BBB' stress scenario, as expected. These potential rating movements are consistent with our credit stability criteria, which outline the outer bound of credit deterioration as a one-category downgrade within the first year for 'AAA' and 'AA' rated securities, a two-category downgrade within the first year for 'A' through 'BB' rated securities under moderate stress conditions, and default for 'BB' rated securities over a three-year period (see "Methodology: Credit Stability Criteria," May 3, 2010).The credit enhancement in the form of subordination, overcollateralization, a reserve account, and excess spread. The collateral characteristics of the subprime pool being securitized. The pool is approximately two-and-a-half months seasoned, with a weighted average original term of approximately 40 months and an average remaining term of about 37 months. As a result, we expect the pool will pay down more quickly than many other subprime pools with longer weighted average original and remaining terms. Our analysis of five years of static pool data following the credit crisis and after United Auto Credit Corp. (UACC) centralized its operations and shifted toward shorter loan terms. We also reviewed the performance of UACC's three outstanding securitizations, as well as its seven securitizations from 2004 to 2007. UACC's 20-plus-year history of originating, underwriting, and servicing subprime auto loans. The transaction's payment and legal structures.