Fitch Affirms Textron 2002-CP-2, Series 2002-1; Outlook Revised to Negative
Recent performance of the transaction has been within expectations. However, the Outlook revision is driven by top obligor concentrations, which have grown since the prior review, and balloon payments that will come due within the next 24 months. While Fitch expects the top obligor concentrations to decline over this timeframe, if borrowers are unable to refinance or otherwise default on their obligations, potential losses could impact credit enhancement available to the notes.
KEY RATING DRIVERS
The affirmation reflects the available credit enhancement to the notes. Additionally, the collateral has displayed stable performance over the last 33 months within Fitch's expectations, as the trust has minimal delinquencies and losses. The Outlook revision is driven by growing obligor concentrations and balloon payments that will come due within the next 24 months. Fitch will continue monitoring the transaction. Negative rating actions could result from performance deterioration or material increases in obligor concentrations.
RATING SENSITIVITIES
Unanticipated increases in the frequency of defaults and loss severity could produce loss levels higher than the current projection and impact available loss coverage and multiple levels for the transaction. Lower loss coverage could impact the rating and Rating Outlook depending on the extent of the decline in coverage.
The future performance of the collateral may become increasingly reliant on the performance of the largest obligors as concentrations are expected to continue increasing. Additionally, potential weakness in the wholesale business and personal aircraft market may cause greater loss severity on defaults. These factors may begin placing pressure on the notes which may cause a negative rating action in the future.
DUE DILIGENCE USAGE
No third-party due diligence was provided to or reviewed by Fitch in relation to this rating action.
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