Fitch Rates FCT Ginkgo Compartment Sales Finance 2015-1's Notes; Outlook Stable
EUR548.5m Class A: 'AAAsf'; Outlook Stable
EUR43 Class B: 'AAsf'; Outlook Stable
EUR38.7m Class C: 'Asf'; Outlook Stable
EUR86.8m Class D: not rated
The notes are backed by a pool of French unsecured consumer loans originated by CA Consumer Finance (CACF; A/Positive/F1). The securitised portfolio consists of loans advanced to individuals for home equipment, recreational vehicles, new vehicles and used vehicles. All loans bear a fixed interest rate and are amortising with constant monthly instalments. The transaction has a maximum 20-month revolving period.
KEY RATING DRIVERS
Underlying Receivables' Credit Risk
Fitch Ratings analysed obligor credit risk by forming base case default expectations (6.7%) and recovery assumptions (47.2%), stressing these assumptions according to the rating level of each note. The agency reviewed separate default and recovery data, and assigned distinct base case default and recovery assumptions for home equipment, recreational vehicle, new vehicle and used vehicle loans.
Revolving Period Risk Mitigated
The transaction has a maximum 20-month revolving period. The early amortisation triggers, along with eligibility criteria and available credit enhancement, adequately mitigate the risk introduced by the revolving period. Fitch has analysed potential changes in the pool composition during this period and modelled a worst-case portfolio.
Servicing Continuity Risk
CACF is the servicer. No back-up servicer was appointed at closing. However, servicing continuity risks are mitigated by, among other things, the monthly transfer of borrowers' details, a commingling reserve, a reserve fund to cover liquidity, and the management company being responsible for appointing a substitute servicer within 30 calendar days upon the occurrence of a servicer termination event.
Asset Outlook
Fitch has a stable outlook for French consumer ABS assets. Although the agency forecasts French economic activity to remain weak over the next two years, characterised by high unemployment, Fitch believes defaults are likely to remain within expectations, as these already incorporate our short-term macroeconomic expectations.
RATING SENSITIVITIES
Fitch tested the rating sensitivity of the notes to various scenarios, including an increase in the base case default rate and/or decrease in the base case recovery rate for the portfolio. The model-implied sensitivities indicate that an increase in the base case default rate by 50% and a decrease in the base case recovery rate by 50% may result in a five-notch downgrade of the class A notes to 'Asf' from 'AAAsf', a six-notch downgrade of the class B notes to 'BBBsf' from 'AAsf' and a five-notch downgrade of the class C notes to 'BBsf' from 'Asf'.
A new issue report, including further information on transaction related stress, key rating drivers and rating sensitivities, as well as material sources of information that were used to prepare the credit rating, is available at www.fitchratings.com.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
DATA ADEQUACY
Fitch reviewed the results of a third party assessment conducted on the asset portfolio information, which indicated no adverse findings material to the rating analysis.
Fitch conducted a review of a small targeted sample of CA CF's origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio.
Overall, Fitch's assessment of the asset pool information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable.
SOURCES OF INFORMATION
The information below was used in the analysis.
-Pool stratification data provided by CACF as at 30 November 2015
-Portfolio amortisation profile provided by CACF as at 30 November 2015
-Monthly origination volumes, dynamic delinquency data, prepayment data, data on cumulative defaults, over-indebtedness and recoveries (following default or following enactment of the restructuring plan by the French OI commission) from at least 2004 to 2015, split by different sub-pools when possible. The data was provided by CACF as at 30 June 2015
REPRESENTATIONS AND WARRANTIES
A comparison of the transaction's Representations, Warranties & Enforcement Mechanisms to those typical for the asset class is available by accessing the appendix that accompanies the new issue report (see FCT Ginkgo Compartment Sales Finance 2015-1- Appendix, dated 29 December 2015 at www.fitchratings.com). In addition refer to the special report "Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions" dated 12 June 2015 available on the Fitch website.
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