Fitch Affirms John Deere Owner Trust 2012
--Class A-3 at 'AAAsf'; Outlook Stable;
--Class A-4 at 'AAAsf'; Outlook Stable.
KEY RATING DRIVERS
The affirmations of the class A notes reflect loss coverage levels consistent with the current ratings. As of the December 2015 reporting period, cumulative net losses totaled 10 basis points, with forecasts below Fitch's initial base case proxy. The Stable Outlook for all classes reflects Fitch's expectation for loss coverage and credit enhancement to continue to improve as the transaction amortizes.
RATING SENSITIVITIES
Unanticipated increases in the frequency of defaults and loss severity could produce loss levels higher than the current projected base case loss proxy which would impact available loss coverage. Lower loss coverage could impact ratings and Rating Outlooks, depending on the extent of the decline in coverage. In Fitch's initial review of the transaction, the notes were found to have limited sensitivity to 1.5x and 2.5x higher of Fitch's base case loss expectations. Initial key rating drivers and rating sensitivities are further described in the new issue reports published on Feb. 21, 2012.
To date, the transaction has exhibited strong performance with losses well within Fitch's initial expectations, with rising loss coverage and multiple levels. As such, continued strong performance for this transaction would most likely result in stable ratings. Conversely, a material deterioration in performance would have to occur within the asset pools to have potential negative impact on the outstanding ratings.
Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'John Deere Owner Trust 2012 - 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 Oct. 31, 2014.
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