OREANDA-NEWS. Fitch Ratings has assigned the following ratings and Outlooks to the notes issued by BMW Vehicle Lease Trust 2016-1:

--$183,000,000 class A-1 notes 'F1+sf';
--$200,000,000 class A-2a notes 'AAAsf'; Outlook Stable;
--$200,000,000 class A-2b notes 'AAAsf'; Outlook Stable;
--$337,000,000 class A-3 notes 'AAAsf'; Outlook Stable;
--$80,000,000 class A-4 notes 'AAAsf'; Outlook Stable.

KEY RATING DRIVERS

Stable Collateral Quality: The 2016-1 pool is consistent with that of 2015-2, with a strong weighted average (WA) FICO score of 778 and 10 months of seasoning. The top vehicle model has shifted to the 5 Series at 24.7% of the pool compared to the 3 Series at 22.8% in 2015-2 and the residual value (RV) maturity profile is more diversified compared to 2015-2.

Adequate CE Structure: Initial credit enhancement (CE) is consistent with 2015-2, but down 0.10% from 2015-1. CE is composed of a 0.25% reserve account and overcollateralization (OC) of 16.80% growing to a 18.95% target of the initial securitization value (once class A-2a and class A-2b have been paid in full, then the target OC drops to 17.95%). Initial excess spread is 5.25%.

Strong Loss Performance: Credit and residuals performance on BMW FS's portfolio has been strong in recent years. This is a result of robust obligor credit quality and wholesale market that is consistently producing gains on BMW vehicles.

Evolving Wholesale Market: The U.S. wholesale vehicle market has been normalizing following strong performance in recent years. Fitch expects that increasing off-lease vehicle supply and pressure from increased production levels will lead to decreased residual realizations during the life of the transaction.

Stable Origination/Underwriting/Servicing: BMW FS demonstrates adequate abilities as originator, underwriter, and servicer to service 2016-1 as evidenced by historical portfolio delinquency and loss experience and securitization performance.

Legal Structure Integrity: The legal structure of the transaction should provide that a bankruptcy of BMW FS would not impair the timeliness of payments on the securities.

RATING SENSITIVITIES
Unanticipated decreases in the value of returned vehicles and/or increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than the base case and would likely result in declines of CE and loss coverage levels available to the notes. Hence, Fitch conducts sensitivity analyses by increasing the transaction's initial base case RV and credit loss assumptions and examining the rating implications on all classes of issued notes. The increases to the base case losses are applied such that they represent moderate (1.5x) and severe (2.5x) stresses, and are intended to provide an indication of the rating sensitivity of notes to unexpected deterioration of a trust's performance.

DUE DILIGENCE USAGE
Fitch was provided with third-party due diligence information from KPMG, LLP. The third-party due diligence focused on comparing or recalculating certain information with respect to 100 receivables. Fitch considered this information in its analysis and the findings did not have an impact on our analysis/conclusions. 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 rating action commentary.

Key Rating Drivers and Rating Sensitivities are further described in the presale report dated Feb. 4, 2016. Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'BMW Vehicle Lease Trust 2016-1 -Appendix'. These R&Ws 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 Jan. 21, 2016.