OREANDA-NEWS. Fitch Ratings has affirmed the ratings of three SC Germany Auto transactions, following a review of their performance. The transactions are SC Germany Auto 2013-1 UG (SCGA13-1), SC Germany Auto 2013-2 UG (SCGA13-2) and SC Germany Auto 2014-1 UG (SCGA14-1).

SCGA13-1
EUR92.1m class A notes (ISIN XS0808632680): affirmed at 'AAAsf'; Outlook Stable

SCGA13-2
EUR126.9m class A notes (ISIN XS0952561636): affirmed at 'AAAsf'; Outlook Stable

SCGA14-1
EUR198.7m class A notes (ISIN XS1041499283): affirmed at 'AAAsf'; Outlook Stable

The transactions are securitisations of static pools of German auto loan receivables originated by Santander Consumer Bank AG, a wholly-owned subsidiary of Santander Consumer Finance S.A. (A-/Stable/F2).

KEY RATING DRIVERS
The rating action reflects the transactions' satisfactory performance over the last 12 months, which has been better than Fitch's expectations. Delinquencies remain low. Accounts delinquent for more than 30 days are between 20bps and 35bps of the transactions' current portfolio balances. Cumulative defaults are lower than Fitch's point-in-time expectations. Recoveries remain low compared with the rest of the sector, due to a significant time lag in recoveries.

Credit enhancement for the class A notes across the transactions has increased in line with the pools' amortisation. All transactions have benefited from significant levels of excess spread since closing, which provide additional protection for the rated notes.

Structural features are in place to protect the transactions against counterparty failure. Reserve funds adequately address payment interruption risk in each transaction. Commingling reserves are sufficient to mitigate commingling risk. In addition, set-off reserve funds, together with available credit enhancement, are adequate to cover the set-off risk.

The transactions' documentation contains remedial actions to be implemented should the account bank's or swap counterparty's credit quality deteriorate. Elavon Financial Services (AA/Stable/F1+) is the issuer's account bank while HSBC Bank plc (AA-/Stable/F1+) is the swap counterparty. Elavon replaced Deutsche Bank AG as account bank in August 2015.

Fitch expects the transactions to extend their satisfactory performance, as reflected in the Stable Outlooks. This expectation is based on the transactions' low delinquency levels, Fitch's stable outlook for German consumer ABS underlying asset performance and a stable economic environment in Germany with low unemployment

RATING SENSITIVITIES
The lifetime default base case was reduced for all three transactions to 0.65% from 1.75% based on the stronger-than-expected performance of the transactions and low default expectations for the remainder of the portfolios. The lifetime recovery expectation remained unchanged at 40%. The lifetime loss rate was revised for each transaction to 0.4% from 1.1%, as derived from the agency's reviewed default and recovery base cases.

Expected impact upon the note ratings of increased defaults and decreased recoveries:

SCGA13-1
Current rating for class A: 'AAAsf'
Increase base case defaults by 25%; decrease recoveries by 25%: 'AAAsf'

SCGA13-2
Current rating for class A: 'AAAsf'
Increase base case defaults by 25%; decrease recoveries by 25%: 'AAAsf'

SCGA14-1
Current rating for class A: 'AAAsf'
Increase base case defaults by 25%; decrease recoveries by 25%: 'AAAsf'

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

DATA ADEQUACY
Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transactions. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring.

Prior to the transactions' closing, Fitch reviewed the results of a third party assessment conducted on the asset portfolio information, which indicated no adverse findings material to the rating analysis.

Prior to the transactions' closing, Fitch conducted a review of a small targeted sample of the origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio.

Overall Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable.

SOURCES OF INFORMATION
The sources of information used to assess these ratings were monthly investor reports provided by Santander Consumer Bank AG.

MODELS
The Fitch Granular Asset Loss Analyser (GALA Model) was used in the analysis. The model is available under https://www.fitchratings.com/site/abs/gala.html.

REPRESENTATIONS AND WARRANTIES
A comparison of the transactions' Representations, Warranties & Enforcement Mechanisms to those typical for the asset class is available by accessing the appendices that accompany the initial new issue reports (see: SC Germany Auto 2013-1 UG - Appendix, dated 26 March 2013, SC Germany Auto 2013-2 UG - Appendix, dated 18 July 2013, SC Germany Auto 2014-1 UG - Appendix, dated 20 March 2014 at www.fitchratings.com). In addition refer to the special report "Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions" dated 6 January 2016 available on the Fitch website.