OREANDA-NEWS. Fitch Ratings expects to assign the following ratings and Rating Outlooks to the notes issued by Ford Credit Auto Owner Trust 2016-A:

--$228,900,000 class A-1 notes 'F1+sf';
--$363,100,000 classes A-2a and A-2b notes 'AAAsf'; Outlook Stable;
--$305,200,000 class A-3 notes 'AAAsf'; Outlook Stable;
--$102,780,000 class A-4 notes 'AAAsf'; Outlook Stable;
--$31,580,000 class B notes 'AAsf'; Outlook Stable;
--$21,050,000 class C notes 'Asf'; Outlook Stable.

KEY RATING DRIVERS
Stable Credit Quality: The 2016-A pool is consistent with prior deals, with a weighted average (WA) FICO score of 734 and 89.5% new vehicle loans. The pool is geographically diverse and has WA seasoning of approximately seven months. Loans with terms of 61 months or more increased to a high 57.1%, the highest ever to date, and Fitch took this risk into account when deriving the 2016-A loss proxy.

Adequate Credit Enhancement (CE) Structure: The cash flow distribution is a sequential-pay structure. Initial hard CE for the class A notes totals 5.54%, consisting of 5.00% subordination, and a 0.54% non-declining reserve. The transaction begins with zero overcollateralization (OC) and builds to a target of 2.00% of initial adjusted collateral balance plus 1.50% of current balance less reserve.

Stable Portfolio/Securitization Performance: Delinquencies and losses on Ford Credit's portfolio and 2009-2014 securitizations are currently at low levels, supported by the improving U.S. economy and stable used vehicle values, although they are expected to soften over the next year. Fitch's initial base case cumulative net loss (CNL) is 1.55%.

Stable Corporate Performance: Fitch's current long-term (LT) Issuer Default Rating (IDR) for both Ford Motor Company (Ford), parent of Ford Credit, and Ford Credit is 'BBB-', with a Positive Outlook.

Consistent Origination/Underwriting/Servicing: Ford Credit demonstrates adequate abilities as an originator, underwriter, and servicer as evidenced by the historical portfolio, securitization delinquencies, and loss performance. Fitch deems Ford Credit an adequate servicer for 2016-A.
Integrity of Legal Structure: The legal structure of the transaction should provide that a bankruptcy of Ford Credit would not impair the timeliness of payments on the securities.

RATING SENSITIVITIES
Unanticipated increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than the base case. This in turn could result in potential rating actions on the notes. Fitch evaluated the sensitivity of the ratings assigned to all classes of 2016-A to increased losses over the life of the transaction. Fitch's analysis found that the notes display some sensitivity to increased defaults and losses. Under Fitch's moderate (1.5x base case loss) scenario the notes would be unlikely to experience any downgrade. However, the notes could experience downgrades of up to two rating categories under Fitch's severe (2.5x base case loss) scenario.

DUE DILIGENCE USAGE
Fitch was provided with third-party due diligence information from PricewaterhouseCoopers LLP. The third-party due diligence focused on comparing or re-computing certain information with respect to 125 loans from the statistical data file. Fitch considered this information in its analysis, and the findings did not have an impact on its analysis. A copy of the ABS Due Diligence Form-15E received by Fitch in connection with this transaction may be obtained through the link at the bottom of the related rating action commentary.

Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in the reports titled Ford Credit Auto Owner Trust 2015-D-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 June 12, 2015.