DBRS Confirms CNH Capital Canada Receivables Trust Series 2010-1

As part of DBRS’s continued effort to provide market participants with updates on an annual basis, DBRS has today confirmed the following ratings of CNH Capital Canada Receivables Trust Series 2010-1 (the Trust):

-- AAA (sf) to the Class A-1 Receivable-Backed Notes, Series 2010-1;
-- AAA (sf) to the Class A-2 Receivable-Backed Notes, Series 2010-1;
-- A (sf) to the Class B Receivable-Backed Notes, Series 2010-1 (collectively, the Notes).

The ratings are based on the following factors:

(1) The high level of credit enhancement available to support the Notes, provided by a reserve account that has increased to 3.38% of the initial aggregate contract value of the Receivables on the cut-off date. In addition, credit support to the Class A-1 Receivables-Backed Notes and the Class A-2 Receivables-Backed Notes (the Class A Notes) is also provided by preferential access to collections arising from the subordination of the Class B Receivable-Backed Notes (the Class B Notes) , equal to 3.0% of the current outstanding balance of the Notes.

(2) The Notes are also protected by excess spread of 2.72% on an annualized basis, that is available to cover monthly credit losses and any replacement servicer cost that could arise.

(3) The Spread Account will continue to build up to 3.5% of the initial aggregate contract value of the Receivables on the cut-off date. Subject to performance of the assets, the Spread Account will be permitted to decrease up to four times on a predetermined schedule as the transaction amortizes. The step-downs are subject to delinquency and cumulative loss triggers.

(4) Low annualized loss levels since inception, averaging 0.04% of the pool balance. Low delinquency levels consistent with the historical performance of other CNH pools of receivables.

(5) Strong CNH Global N.V. (CNH Global) brand allegiance and support in the resale market for the related equipment, if required.

(6) A well-diversified portfolio with respect to obligor concentrations (largest single-obligor concentration limit of 1.0%) and taking into consideration the asset class, a balanced geographic representation across Canada.

(7) A ready Backup Servicer (Systems and Services Technologies Inc.) available to act as a replacement servicer, with $500,000 in an account funded at closing to offset the costs associated with the transition to the backup servicer.

(8) A lack of diversification in equipment type (agricultural equipment represented 95.3% of the initial pool of assets) is mitigated in part by stronger performance in the agricultural equipment sector.

Funding for the Trust on closing was provided by the issuance of $363.8 million of the Notes. The Notes are amortizing bonds, with monthly interest payments. Interest on the Class A Notes is paid on a pro rata basis. Interest on the Class B Notes is paid only after interest and principal has been paid on the Class A Notes. Principal repayments are made sequentially in order of priority, with the Class A-1 Notes being repaid first. No principal payments will be made to the Class A-2 Notes or the Class B Notes until the Class A-1 Notes have been fully repaid.

The Receivables relate to advances made by CNH to its agricultural and construction equipment customers throughout Canada to support their purchases of new and used agricultural and construction equipment and parts for their farming and construction-related businesses. The Receivables are simple-interest receivables. No Receivable has a scheduled maturity later than the date that is six months prior to the Final Scheduled Maturity Date for the Class B Notes. The receivables originated by CNH have been legally transferred from CNH to the Trust as evidenced by true-sale opinions that were provided by the Seller’s counsel.

Since the cost of funds for both the underlying assets and the Notes issued by the Trust are based on fixed-rate indices, no hedging instruments were required.

Cash collected with respect to the Receivables will be remitted to the Trust within two business days of processing by the Servicer. Remittance of collections other than on a daily basis is subject to the following criteria: 1) CNH is the Servicer; 2) No Servicer Default has occurred and is continuing; and 3) CNH Global is rated at least BBB (low) by DBRS.

CNH, in its capacity as the initial Servicer, is servicing the Receivables. On closing, the Servicer engaged a Backup Servicer (Systems & Service Technologies Inc.). The Backup Servicer is available to service the portfolio in the event that a majority of the Noteholders (based on Notes outstanding at time of default) vote to replace the Servicer or the Indenture Trustee appoints a Successor Servicer in the event of a Servicer Default.

Certain events may lead to an Event of Default and Acceleration for the Trust and the Notes. Once an Event of Default occurs, the payment waterfall dictates that all principal payments will be paid first to the Class A Noteholders on each applicable principal payment date until the Class A-1 and the Class A-2 Note principal balances have been paid in full (on a sequential basis) and second, to the Class B Noteholders on each applicable principal payment date until the Class B Note principal balance has been paid in full.

For more detailed information on the transaction structure, please refer to the rating report of the Trust at www.dbrs.com or by clicking on the link below.

The performance and characteristics of the pool and the Notes are available and updated each month in the Monthly Canadian ABS Report (see Related Research below).

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

The applicable methodology is Rating Canadian Equipment Finance Securitization, which is available on our website under Methodologies.