Fitch Upgrades Goals Financing 2009's Class B Notes
EUR1.5m class A notes affirmed at 'AAAsf'; Outlook Stable
EUR22.4m class B notes upgraded to 'AAAsf' from 'AAsf'; Outlook Stable
The transaction securitises lease receivables originated by GrenkeLeasing AG of mainly IT and office equipment, to corporate or self-employed lessees in Germany. The transaction was revolving until April 2013 and has since started to pay down in sequential order while the pool's composition has remained stable.
As at the January 2015 payment date, the pool consisted of 15,738 lease contracts. Lease contracts financing copy machines made up 37% of the pool, IT equipment 26% and machine and fittings 13%, with the remainder being linked to other types of office, telecommunication, medical, or security equipment.
KEY RATING DRIVERS
The rating actions reflect robust performance as supported by low pool delinquencies and defaults, the stable economic outlook for Germany and the deleveraging of the transaction. To reflect performance to date, Fitch has revised the transaction's lifetime default base case to 2.25% from 3.5%. Furthermore, since the revolving period ended in April 2013, the transaction has benefited from a high principal payment rate of 50% on average. This has caused the transaction to amortise to 25% of its original portfolio balance.
The delinquency rate has been stable over time and as of the latest reporting date (January 2015) equalled 1.17% of the outstanding portfolio. Cumulative defaults amount to 1.9%, including new purchases, which is better than Fitch's initial base case assumption of 5.6%. The cumulative recovery rate on defaulted loans currently stands at 35%.
The transaction's reserve fund is at EUR2.5m, which is also the floor. Excess spread is available to cover losses and has remained healthy to date. This has been sufficient to cover all losses so far without any requirement to draw upon the reserve fund.
Expected impact upon the note ratings of increased defaults:
Increase base case defaults by 25% for class A: 'AAAsf'
Increase base case defaults by 25% for class B: 'AAAsf'
Expected impact upon the note ratings of decreased recoveries:
Decrease recoveries by 25% for class A: 'AAAsf'
Decrease recoveries by 25% for class B: 'AAAsf'
Expected impact upon the note ratings of increased defaults and decreases recoveries:
Increase base case defaults by 25%; decrease recoveries by 25% for class A: 'AAAsf'
Increase base case defaults by 25%; decrease recoveries by 25% for class B: 'AAAsf'