DBRS Assigns Preliminary Ratings to Capital Auto Receivables Asset Trust (CARAT) 2007-SN1

DBRS has today assigned provisional ratings to Capital Auto Receivables Asset Trust 2007-SN1 (CARAT 2007-SN1) as follows:

-- $415,000,000 Asset-Backed Notes, Class A-1 at R-1 (high)
-- $655,000,000 Asset-Backed Notes, Class A-2 at AAA
-- $660,000,000 Asset-Backed Notes, Class A-3 at AAA
-- $405,007,000 Asset-Backed Notes, Class A-4 at AAA
-- $56,250,000 Asset-Backed Notes, Class B at AA
-- $55,000,000 Asset-Backed Notes, Class C at A
-- $60,000,000 Asset-Backed Notes, Class D at BBB

This represents the second public securitization of a pool of new auto lease receivables originated and serviced by GMAC, LLC (GMAC). Credit enhancement is provided by excess spread, overcollateralization, a reserve account and subordination, where applicable. The DBRS ratings of CARAT 2007-SN1 incorporate the following factors:

Strengths:

• The total level of credit enhancement in the transaction structure allows it to withstand significant stresses relative to base-case losses and residual-value stresses, as appropriate for each rating category.

• The scheduled maturities of the pool of leases are laddered throughout the term of the transaction. The maximum lease term is also 48 months. These factors respectively result in a more even distribution of exposures to the used car market as well as an ultimate exposure to the used car market of up to four years.

• The reserve account is non-declining and is generally sized to equal 0.75% of the initial aggregate asset-backed securities (ABS) value of the lease assets. This feature has the potential to provide increasing credit support as the notes amortize.

• Overcollateralization is non-declining and is designed to grow to a target level of 9.75% of the initial aggregate ABS value of the lease assets, which may also provide increasing credit support as the notes amortize.

• GMAC’s experience in underwriting and servicing auto leases.

Concerns/Mitigants:

• A significant portion of the lease contracts have stated residual values that are greater than the Automotive Lease Guide (ALG) value at origination. However, the lease residual transferred to the trust is based on the lower of the stated residual or the ALG-estimated residual at origination.

• Historically, pull-ahead incentives from GM have led to a high number of early lease terminations. These early terminations have partly mitigated the severity of residual losses. However, DBRS does not give credit to early terminations. DBRS applied significant turn-in rate and residual value stresses as appropriate for each rating category that consider this potential situation.

• There is a significant concentration of lease assets located in Michigan (29.28%). The state is heavily concentrated in the automobile industry, particularly the manufacturing and auto parts sector. DBRS recognizes that the remaining state exposures are diverse and has reviewed the underwriting and servicing procedures associated with the leases.

• Four of the top seven vehicle models (as measured by percentage of initial ABS value) are sport-utility vehicles (SUVs). This model class has seen the most severely negative year-over-year value decline in the used car market. DBRS relies on the most current ALG value for all vehicles in the pool to ensure current used car market conditions are used as a baseline in the residual value analysis.

• A bankruptcy of GM would have an adverse impact on the residual values at the expiration of the lease terms. (DBRS rates GM’s long-term senior debt at B and short-term debt at R-5, with Negative trends; DBRS rates GMAC’s long-term senior debt at BBB (low) and short-term debt at R-3, with Stable trends.) DBRS has considered these factors and has determined that the credit enhancement is adequate to cover such stressed circumstances.

Notes:
The Class A-1 notes are being offered as a 144a.
All figures are in U.S. dollars unless otherwise noted.