DBRS Confirms Ratings in Two Rental Car Finance Corp. (“RCFC”) Series

DBRS, Inc. (DBRS) confirms the existing ratings for the Rental Car Asset Backed Variable Funding Notes, Series 2010-3 at AA (sf), the Rental Car Asset Backed Variable Funding Notes, Series 2011-1, Class A at AAA (sf) and the Series 2011-1, Class B at ‘A’ (sf).

The rating confirmation is based on a review of transaction amendments that provide for the replacement of the letter of credit provider (“LC”) for the Series 2010-3 and 2011-1 issued by Rental Car Finance Corp. The new replacement letter of credit provider is Bank of America, N.A. DBRS currently rates Bank of America, N.A. at “A / R-1 (middle) / Stable”.

The rationale for the confirmation includes:

o Performance of the transactions is within DBRS expectations;
o The credit enhancement is dynamic based on the collateral mix within the trust. The LC is a component of the credit enhancement for each respective series, which in addition to subordination is meant to address potential “stay risk”. The stay period is assumed to be 60 days; however, our stresses for this asset class at each rating category are as follows:

Liquidation Period--------Months
AAA (sf)------------------------ 7.0
AA (sf) ------------------------- 5.0
A (sf) --------------------------- 3.0

o The risk of the liquidation period in our “AAA (sf)” stresses is 7 months or below which is commensurate with the LC provider’s short term rating.
o The structure provides for a liquidation of the LC if certain events occur. These events include:
(1) Decline in the rating outlined in the LC agreement (P-1 (Moody’s), and; if the LC is rated by DBRS, the equivalent rating level (R-1 (middle)) or
(2) LC expiration date or
(3) Default by the LC provider
o Commingling is restricted to two business days.
o The rating confirmation also reflects an exception to our current criteria which sets forth both a short-term rating of R-1 (middle) and long term rating of AA (low) for LC providers. Bank of America, N.A. currently meets the short-term rating criteria only. This exception is mitigated by the considerations cited above with regard to the short term nature of the risk and the coverage of the liquidation period as noted above.

The applicable methodologies are Rating U.S. Rental Car Securitizations and the Legal Criteria for U.S. Structured Finance Transactions, which can be found on our website under Methodologies.