Fitch Affirms GE EMT 2014-1 and Revises One Outlook
--Class A-2 affirmed at 'AAAsf'; Outlook Stable;
--Class A-3 affirmed at 'AAAsf'; Outlook Stable;
--Class A-4 affirmed at 'AAAsf'; Outlook Stable;
--Class B affirmed at 'AAsf'; Outlook to Positive from Stable.
KEY RATING DRIVERS
The affirmation of the notes reflects the growing credit enhancement (CE) available to both classes providing higher net loss coverage levels than at close. The transaction's 4 basis points (bps) of losses is tracking below Fitch's initial base case and extrapolates to 18bps. Consistent with initial review of the transaction, Fitch remains cautious on the growing obligor concentrations in the pool. However, Fitch's Outlook revision on class B to Positive reflects the expectation of continued CE build which will mitigate this risk. Fitch will continue monitoring the performance of this transaction and may take additional rating actions.
Unanticipated increases in the frequency of defaults and loss severity could produce loss levels higher than the current projected base case loss proxies, 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 presale report published Sept. 8, 2014, available at www.fitchratings.com.
To date, the transaction has exhibited strong performance with losses within Fitch's initial expectations, with rising loss coverage and increasing multiples. 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.
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 transactions can be found in 'GE Equipment Mid-Ticket, L.L.C Series 2014-1 - 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 March 26, 2015.