DBRS Assigns Provisional Ratings to Ford Floorplan Auto Securitization Trust, Series 2013-F1 Fixed Rate Notes

DBRS has today assigned provisional ratings to the Series 2013-F1 Fixed Rate Notes (the Series 2013-F1 Notes) to be issued by Ford Floorplan Auto Securitization Trust (FFAST or the Trust). The Series 2013-F1 Notes provisional ratings are as follows:

-- AAA (sf) to Class A Notes
-- AA (sf) to Class B Notes
-- A (sf) to Class C Notes
-- BBB (sf) to Class D Notes

On closing, the Trust will acquire an ownership interest in a portfolio of floorplan receivables originated by Ford Credit Canada Limited (FCCL) and backed by a security interest in an underlying pool of new and used vehicles. The Series 2013-F1 Notes will pay a fixed rate of interest semi-annually, with an expected repayment dates for the Notes of June 15, 2016. Interest and principal are expected to be paid from collections on the receivables. The provisional ratings incorporate the following considerations:

(1) The historic low net loss levels exhibited by the portfolio on an annual basis since 2005.

(2) The consistent level of high monthly payment rates.

(3) The high level of credit enhancement available to support the obligations: 12.0% of overcollateralization; a cash reserve of 1.0% of the Notes; subordination of 11.5% available to the Class A Notes, 8.0% available to the Class B Notes and 3.0% available to the Class C Notes; excess interest rate spread of approximately 2.0% after deducting anticipated cost of funds; and an accumulation period reserve account of 0.25% to protect the structure from negative carry on the portfolio arising from the buildup of cash during the accumulation period.

(4) Structural features to protect the Noteholders, including the following:
-- A performance guarantee from the seller’s parent, Ford Motor Credit Company.
-- Payment rate triggers that step up the required overcollateralization and the cash reserve in the event that the performance of the portfolio begins to deteriorate below pre-defined levels.
-- Remittance of cash collections within two days of processing.
-- Daily interest collections held in the Collections Account by the custodian to ensure monthly interest payments are met prior to releasing excess collections to the seller.
-- Appointment of a Backup Servicer.
-- A pre-funded replacement servicer reserve.

(5) All accounts and their associated receivables transferred to the Trust after the close of the transaction must meet the same eligibility criteria as the accounts and receivables that were sold to the Trust as part of the initial transfer. Eligibility criteria include, but are not limited to, the following: (a) all receivables are supported by a perfected first-priority security interest in the underlying vehicle being financed; (b) all accounts are created in compliance with the underlying FCCL floorplan financing requirements and no amounts have been charged off as uncollectible at any time within the last 24 months; and (c) an account that is in favour of a dealer in which Ford Motor Company of Canada or any of its affiliates does not have an equity investment exceeding 5.0%.

Stress tests that applied assumptions, including rapid and significant declines in dealer payment rates and in the recovery value of the underlying vehicles, combined with a rapid and significant increase in dealer defaults, indicate that the credit enhancement provides sufficient protection to the Notes to warrant the provisional ratings.

Finalization of ratings is contingent upon receipt of final documents conforming to information already received by DBRS.

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 Rating Canadian Floorplan Securitizations and Legal Criteria for Canadian Structured Finance, which can be found on our website under Methodologies.