DBRS Confirms Ford Floorplan Auto Securitization Trust, Series 2010-F1

DBRS has today confirmed the ratings on the following notes (collectively, the Notes) issued by Ford Floorplan Auto Securitization Trust (the Trust), as part of DBRS’s continued effort to provide market participants with updates on an annual basis:

-- Fixed Rate Asset-Backed Notes, Series 2010-F1, Class A at AAA (sf)
-- Fixed Rate Asset-Backed Notes, Series 2010-F1, Class B at AA (sf)
-- Fixed Rate Asset-Backed Notes, Series 2010-F1, Class C at A (sf)
-- Fixed Rate Asset-Backed Notes, Series 2010-F1, Class D at BBB (sf)

The ratings are based on the following factors:

(1) The Notes are protected by high levels of credit enhancement provided by overcollateralization equal to 15.6% of their current principal balance and a non-amortizing reserve account that was seeded at inception with an amount equivalent to 1% of their current principal balance. Credit support to the Class A Notes is also provided by preferential access to collections arising from the subordination of the Class B Notes, Class C Notes and Class D Notes equal to 15.6% of the Notes’ principal balance. The Class B Notes receive preferential access to collections from the subordination of the Class C Notes and Class D Notes equal to 13.3% of the Notes’ principal balance. The Class C Notes receive preferential access to collections from the subordination of the Class D Notes equal to 4.6% of the Notes’ principal balance.

(2) In addition to the enhancement amounts, the aggregate Notes are supported by excess spread of approximately 0.9% and by eligible receivables equal to 105% of the Notes to cover any negative impact on the portfolio that arises from dilutions.

(3) Cumulative losses experienced by the Trust’s portfolio since 2010 remained at zero as Ford Credit Canada Limited (FCCL; rated BBB (low) with a Stable trend by DBRS) has repurchased all the receivables from the Trust that have been impaired, even though it is not required to do so.

(4) The reserve account builds up to 5.0% of the initial principal balance of the Notes if an amortization event occurs.

(5) The monthly principal payment rates from dealers in the Trust continue to be consistently high, ranging from 37.0% to 67.5% for the period May 2010 to February 2013.

(6) FCCL is a seasoned and capable seller and initial servicer, and provides financing to Ford dealers throughout Canada and to a small number of non-Ford branded dealers. FCCL has demonstrated a long track record of managing a wholesale financing program with its dealers and has been in business in Canada since 1962.

(7) The performance of dealers is expected to correlate with the performance of Ford Motor Company (Ford; rated BBB (low) with a Stable trend by DBRS). A strong performance of the manufacturer implies a stable supply of new vehicles and parts as well as warranty and brand support. DBRS upgraded the rating of Ford on September 14, 2012, to reflect the company’s continuously solid performance, with Ford becoming significantly profitable from 2010 through the first half of 2012.

(8) Structural mitigants include a performance guarantee from its U.S. parent, Ford Motor Credit Company LLC (Ford Credit; rated BBB (low) with a Stable trend by DBRS), payment rate triggers, dealer and used-vehicle concentration limits and additional transaction triggers tied to the health of FCCL, Ford Credit, Ford Motor Company of Canada and its U.S. parent, Ford.

(9) First-perfected security interest in new and used vehicles and, in many cases, additional security provided by each dealer in the form of personal guarantees and/or the taking of security in dealers’ holdings, represented primarily by real estate.

(10) Servicer risk addressed through the contractual inclusion of a ready backup servicer in Wells Fargo Bank, N.A. (rated AA (high) with a Stable trend by DBRS).

For more detailed information on the transaction structure, please refer to the rating reports of the Trust at www.dbrs.com.

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 to the right of the screen).

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

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodologies are Canadian Structured Finance Surveillance (March 2012), Rating Canadian Floorplan Securitizations (May 2011) and Legal Criteria for Canadian Structured Finance (September 2012), which are available on our website under Methodologies.