Fitch to Rate GMF Floorplan Owner Revolving Trust, Series 2016-1; Issues Presale
OREANDA-NEWS. Fitch Ratings expects to assign the following ratings and outlooks to the GMF Floorplan Owner Revolving Trust, series 2016-1 as follows:
--$500,000,000 classes A-1/A-2 asset-backed notes 'AAAsf'; Outlook Stable;
--$34,246,000 class B asset-backed notes 'AAsf'; Outlook Stable;
--$30,822,000 class C asset-backed notes 'Asf'; Outlook Stable;
--$27,397,000 class D asset-backed notes 'BBBsf'; Outlook Stable.
KEY RATING DRIVERS
Quality of Wholesale Receivables: The receivables are primarily new vehicles (85% as of March 31, 2016, the trust's statistical date [SD]) with strong aging distribution.
Adequate Dealer Diversification: The trust is comprised of 591 dealer accounts, with the top 25 dealers in the trust totalling significantly less than 50% of the trust balance as of the SD. Dealer concentration limits are in place, mitigating risks of individual dealer defaults and losses. Concentration limits are also in place to limit exposure to specific vehicle types and segments.
Strength of Dealer Network: The financial health of GMF's dealer network is evidenced by the current stable dealer financial metrics, including healthy dealer revenues, with the majority of dealers recording solid profits since inception.
Stable Trust Performance: Since inception in February 2013, GMF's trust portfolio has experienced consistent performance trends, including stable MPRs, low agings, stable yields, and zero dealer defaults or losses.
Sufficient Credit Enhancement: Initial credit enhancement (CE) for the class A notes is 27.86% (of the initial collateral balance), down from 29.36% in 2015-1; all note CE is lower in 2016-1 versus 2015-1. Structural features such as early amortization triggers mitigate risks of manufacturer and dealer defaults and/or bankruptcies.
Consistent Origination and Servicing: GMF demonstrates adequate abilities as originator, underwriter and servicer, as evidenced by their total portfolio and GFORT performance metrics.
Legal Analysis: The legal structure of the transaction provides that a bankruptcy of GMF would not impair the timeliness of payments on the securities.
To conduct rating sensitivity for the issued notes, under a category B Dealer Floorplan platform, Fitch assumes portfolio default levels at 10%, 25%, and 40%, and under two recovery-level scenarios of 50% and 30%. Fitch modeled these series with the assumption that the above defaults have occurred and recoveries stressed accordingly, reflecting asset performance in a stressed environment. Remaining expected loss levels were compared with the stressed loss assumption grid commensurate with various rating levels.
DUE DILIGENCE USAGE
No third-party due diligence was provided or reviewed as 2016-1 is a private 144A offering.
Fitch's analysis of the Representation and Warranties (R&W) of these transactions can be found in 'GM Financial Floorplan Owner Revolving Trust, Series 2016-1 -- Appendix'. These R&W are compared to those of typical R&W for the asset class as detailed in Fitch's March 2016 special report, 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions'.