DBRS Publishes Rating Methodology for Non-Captive Auto Finance Institutions

Dominion Bond Rating Service (“DBRS”) has today published its methodology for rating U.S. non-captive automotive finance institutions. The rating methodology, available under the Methodologies section at www.dbrs.com, summarizes the factors DBRS considers in its evaluation of the creditworthiness of non- captive automotive lenders.

The methodology is intended to offer the analytical foundation by which these institutions are reviewed, and act as the framework upon which DBRS ratings are based; the methodology was designed to provide a relatively complete range of rating considerations for non-captive companies that operate within this rather competitive sector.

The underpinning of DBRS’s approach is a comprehensive assessment of the qualitative and quantitative factors that influence a financial institution’s credit strength, which includes an overall understanding of the idiosyncrasies of the U.S. automotive finance industry and the particulars of each individual rated company.

“The landscape in the automotive finance industry is one of continual change, yet the highly competitive business environment is the one constant. Although dominated by the captives, the financial stress at the U.S. auto manufacturers has encouraged many more non-traditional players to enter the fray. Banks and other financial institutions continue as participants, which is not surprising, given the short-term nature and the prepayment predictability of this asset class,” says Steve Picarillo, Senior Vice President, Financial Institutions Group.

DBRS believes this rating methodology will further expand the rating transparency for the industry’s non-captive participants, which includes banks, thrifts, large diversified financial institutions, and the monoline non-prime automotive lenders.

“DBRS is enthusiastic about deepening its coverage in this vibrant industry and believes that the U.S. Banking Team and the U.S. Structured Finance group have set the groundwork for a high level of achievement in covering this industry,” says Alan G. Reid, Managing Director of U.S. Financial Institutions Group.

DBRS is a recognized, international rating agency, providing timely and comprehensive rating opinions to the world’s capital markets. Privately owned and independent, DBRS offers in-depth credit analysis of corporate and government issues in North America, Europe, Asia, and Latin America. DBRS’s extensive coverage of structured finance and securitization has solidified its standing as a leading provider of comprehensive, in-depth credit analysis. DBRS is headquartered in Toronto, with offices in New York, Chicago, London, Frankfurt, and Paris, and covers entities worldwide. For more information, visit www.dbrs.com