DBRS Publishes Final Rating Methodology for U.S. Wholesale Auto Transactions

DBRS has published its final rating methodology for U.S. wholesale auto loan asset-backed transactions (ABS). The final methodology does not have any substantive changes from the proposed wholesale auto loan methodology which was published on October 21, 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. wholesale auto ABS and our approach for rating these transactions. These factors include:

•Creditworthiness and business profile of vehicle manufacturer;
•Operational and servicing capabilities of finance company as
servicer;
•Profile of dealer base and concentrations within dealer base;
•Capital structure, proposed ratings and credit enhancement;
•Liquidation and cash flow analysis;
•Legal structure and opinions.

As part of the rating process, DBRS performs an operational risk review and assessment of the finance company’s operational and servicing capabilities with particular focus on monitoring dealer inventories and sales of vehicles. For each requested rating, DBRS develops cash flow stress assumptions based upon the proposed transaction structure to test the viability of the transaction under various scenarios.

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.