OREANDA-NEWS. March 21, 2016. Fitch Ratings assigns the following ratings to Conn's Receivables Funding 2016-A, LLC (Conn's 2016-A), which consists of notes backed by retail loans originated and serviced by Conn Appliances, Inc. (Conn's):

--\\$423,030,000 class A notes at 'BBBsf'; Outlook Stable;
--\\$70,510,000 class B notes at 'BBsf'; Outlook Stable;
--\\$70,510,000 class C notes at 'Bsf'; Outlook Stable;
--Class R notes at 'NRsf'.

KEY RATING DRIVERS
Adequate Collateral Quality: The 2016-A trust pool consists of 100% fixed-rate consumer loans originated and serviced by Conn Appliances, Inc. The pool exhibits a weighted average FICO score of 611 and a weighted average borrower rate of 21.54%.

Sufficient Credit Enhancement (CE): The initial hard CE for class A, B and C is expected to be 41.50%, 31.50% and 21.50%, respectively, including the reserve account. Additionally, the class A notes will benefit from subordination provided by the class B and C notes, and the class B notes will benefit from subordination provided by the class C notes. Transaction cash flows were satisfactory under all stressed scenarios, commensurate with the ratings.

Rating Cap at 'BBBsf': Due to higher loan defaults in recent years, management changes at Conn's, and the credit risk profile of Conn's, Fitch placed a rating cap on this transaction at the 'BBBsf' category.

Adequate Liquidity Support: Liquidity support is provided by a non-declining reserve account, which will be fully funded at closing at 1.50% of the initial pool balance.

Acceptable Servicing Capabilities: Conn Appliances, Inc. demonstrates adequate abilities as originator, underwriter, and servicer. The credit risk profile of the entity is mitigated by the backup servicing provided by Systems & Services Technologies, Inc. (SST).

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

RATING SENSITIVITIES
Unanticipated increases in the frequency of defaults or chargeoffs on customer accounts could produce loss levels higher than the base case and would likely result in declines of CE and remaining loss coverage levels available to the investments. Decreased CE may make certain ratings on the investments susceptible to potential negative rating actions, depending on the extent of the decline in coverage.

Fitch conducts sensitivity analysis by stressing a transaction's initial base case chargeoff assumption by 1.5x, 2.0x and 2.5x, and examining the rating implications. The 1.5x, 2.0x and 2.5x increase of the base case chargeoffs are intended to provide an indication of the rating sensitivity of the notes to unexpected deterioration of a transaction's performance.

During the sensitivity analysis, Fitch examines the magnitude of the multiplier compression by projecting the expected cash flows and loss coverage levels over the life of investments under higher than the initial base case chargeoff assumptions. Fitch models cash flows with the revised chargeoff estimates while holding constant all other modeling assumptions.

Under the 1.5x base case stress scenario, class A notes would retain the current rating, while class B notes would experience a one-notch downgrade. Under the 2x base case stress scenario, class A notes would be downgraded one notch, while class B notes would be downgraded one category to Bsf. Under the 2.5x base case stress scenario, class A notes would be downgraded to 'B+sf', and class B and C notes would fall to 'CCCsf'.

DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed in relation to this rating action.

Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'Conn's Receivables Funding 2016-A, LLC - 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 June 2015.