DBRS Confirms Ratings to Axis Capital Funding, LLC

DBRS has confirmed the ratings for the $85 million Maximum Facility Amount issued by Axis Capital Funding, LLC (ACF) at BBB. The transaction closed in February 2007 and is currently funded on WestLB AG’s balance sheet. Credit enhancement is 21.0% and is composed of overcollateralization and a reserve account.

The confirmation was provided in connection with modifications to the facility that will permit the originator, Axis Capital, Inc., (Axis) to purchase assets from another leasing company and add those receivables to the facility. The purchased assets were in similar business lines and highly seasoned. In order to determine that the acquisition would meet their underwriting standards, Axis performed a credit review on approximately 70% of the portfolio being acquired.

The confirmation was based upon the following:

(1) Credit enhancement can support cumulative net losses under various scenarios with multiples that are well within the DBRS BBB range for this asset class.

(2) The facility is actively administered by WestLB (rated A (high)/R-1 (middle) by DBRS).

(3) WestLB is the swap provider in the transaction.

(4) Wells Fargo Bank, N.A. (rated AA (high)/R-1 (high) by DBRS) is the backup servicer to Axis for this facility and is an acceptable servicer in the equipment lease and loan sector.

(5) The facility does not fund residuals. This is a small part of the company’s business to date, and to the extent that true leases are pledged, the facility does not give any credit to the residuals.

(6) Facility concentration limits ensure diversification is maintained. The facility includes concentration levels that address single obligors, the top obligors, equipment types, vendors and business lines.

(7) Leases are generated through two channels: direct and indirect leases. The indirect, or brokered, business channel is subject to the same credit guidelines as those leases that are originated via direct business channels.

(8) The modifications to the facility tighten certain performance triggers in the facility. These triggers are designed to limit or stop new funding availability, and/or create additional credit enhancement within the facility.

Note:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is the Rating U.S. Equipment Lease and Loan Securitizations, which can be found on www.dbrs.com under Methodologies.