DBRS Finalizes Provisional AAA (sf) Rating of WTH Car Rental ULC Fixed Rate Asset-Backed Notes, Series 2011-1

DBRS has today finalized the provisional rating of AAA (sf) on the $200 million 4.413% Fixed Rate Asset-Backed Notes, Series 2011-1 (the Notes) issued by WTH Car Rental ULC (the Issuer). The Notes will be repaid through the collection of proceeds arising from the daily rental of the vehicles in the Vehicle Fleet, the repurchase of Program Vehicles by the Program Vehicle Manufacturers and the sale of Non-Program Vehicles. The Issuer owns the Vehicle Fleet and has leased the Vehicle Fleet to Funding LP, operated by Aviscar Inc. (Avis) and Budgetcar Inc. (Budget) as General Partners of Funding LP, for daily rentals by Avis and Budget. The Issuer has also subcontracted the administration and operation of the Vehicle Fleet to Funding LP.

The rating is based on the following factors:

(1) A well-diversified portfolio and established fleet concentration limits with respect to Program Vehicles and Non-Program Vehicles, managed by an experienced originator in the daily-use auto rental business in Canada. Cyclical and seasonal, the industry is currently experiencing a modest recovery from the recent difficult economic environment; however, the transaction is structured to withstand a liquidation of the Vehicle Fleet.

(2) The consistently low loss levels on the resale of Non-Program Vehicles exhibited by the Canadian rental operation, as evidenced by a long track record of successful securitization programs in the Canadian marketplace.

(3) The high levels of credit enhancement required for Program Vehicles and Non-Program Vehicles to support the obligations. The level of enhancement available for Program Vehicles is dynamic and depends on the rating of the vehicle manufacturer. For Non-Program Vehicles, the level of enhancement can increase if losses experienced on the disposition of the Non-Program Vehicles exceed a specified threshold. A minimum level of 5.875% in cash or a letter of credit (L/C) with a counterparty that meets DBRS criteria is available to be drawn on to provide liquidity to the transaction, if required. Enhancement is sized on the assumption that the fleet will have to be liquidated at its highest peak prior to the Expected Final Payment Date of the Notes. Additionally, a monthly cash flow amortization event test, based on the cost of funds at closing, is required to be met to ensure that a minimum level of contribution from the rents paid by Funding LP is available to support the structure.

(4) A bankruptcy-remote structure that provides for repayment of the Notes under a Controlled Amortization Period that commences six reporting periods prior to the Notes’ Expected Final Payment Date. In the event that an Event of Default is triggered, a back-up servicer and a liquidation agent are available to manage the disposition of the fleet and direct funds according to the transaction documents. Fees required to pay the back-up servicer and liquidation agent are included in the initial required enhancement calculation.

Notes:
All figures are in Canadian dollars unless otherwise noted.

Various capitalized terms are used in this press release can be found in the Index of Defined Terms (Schedule A) of the short-form prospectus relating to the Notes.

The applicable methodologies are Rating Canadian Rental Car Securitization and Legal Criteria for Canadian Structured Finance, which can be found on our website under Methodologies.