DBRS Publishes Final Rating Methodology for U.S. Rental Car ABS

DBRS has published its final rating methodology for U.S. asset-backed transactions (ABS) backed by rental cars. The final methodology does not have any substantive changes from the proposed rental car methodology which was published on September 9, 2009 with a request for comments.

The methodology provides an overview of the key factors which DBRS believes could impact the performance of U.S. rental car ABS and our approach for rating these transactions. These factors include:

• Quality of management and financial condition;
• Operational and servicing capabilities;
• Fleet composition and purchase agreements;
• Capital structure, proposed ratings and credit enhancement;
• Liquidation analysis;
• Legal structure and opinions.

As part of the rating process, DBRS assesses the likelihood of repayment of the transaction under the terms of the proposed financial structure as set forth in the legal documents. We evaluate the adequacy of the proposed credit enhancement and capital structure under a liquidation scenario assuming a bankruptcy of the lessee (rental car company) under the proposed transaction.

The key variables impacting this analysis include the likelihood of a default of the auto manufacturers and the timing considerations associated with gaining access to the cars following a bankruptcy of the rental car company. It also includes a review of the potential timing delays associated with liquidating a large fleet of vehicles under difficult circumstances.

DBRS criteria and methodologies are publicly available on its website www.dbrs.com under Methodologies.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.

DBRS's rating definitions and the terms of use of such ratings are available at www.dbrs.com.