DBRS Upgrades Nine Classes and Confirms Four Others of Merrill Lynch Financial Assets Inc., Series 2003-Canada 10

DBRS has today upgraded the ratings on nine classes of Merrill Lynch Financial Assets Inc., Series 2003-Canada 10 as follows:

-- Class D-1 to AAA (sf) from AA (sf)
-- Class D-2 to AAA (sf) from AA (sf)
-- Class E-1 to AAA (sf) from A (sf)
-- Class E-2 to AAA (sf) from A (sf)
-- Class F to AA (sf) from BBB (sf)
-- Class G to A (high) (sf) from BB (high) (sf)
-- Class H to A (low) (sf) from BB (sf)
-- Class J to BBB (low) (sf) from B (sf)
-- Class K to BB (sf) from B (low) (sf)

Additionally, DBRS has confirmed the ratings on Class B and Class C, as well as the notional Class XC-1 and Class XC-2, at AAA (sf). The rating on Class A-2 was discontinued this month after the class was repaid in full with the June 2013 remittance. DBRS does not rate the $5,985,200 first loss piece, Class L. All trends are Stable.

The rating upgrades reflect the strong performance the pool continues to exhibit, with 44 loans having been successfully repaid since issuance out of the original loan count of 55. Since the last DBRS rating action on the transaction in June 2012, 31 loans have been repaid in full. As of the June 2013 remittance report, approximately 87.0% of the collateral has been reduced, with 52.8% of collateral reduction having occurred since June 2012. Additionally, one loan, representing 24.8% of the pool balance, has defeased.

There are no loans in special servicing and there are seven loans on the servicer’s watchlist, representing 35.2% of the current pool balance. These loans remain current and are being monitored for a low debt service coverage ratio or upcoming maturity.

As part of its review, DBRS analyzed all 11 remaining loans in the transaction.

DBRS has applied a net cash flow stress scenario across all the loans in the pool, and the resulting DBRS required credit enhancement levels, when compared with the current credit enhancement levels to the bonds, warrant the rating upgrades.

DBRS continues to monitor this transaction in its Monthly CMBS Surveillance Report, with additional information on the DBRS viewpoint for this transaction including details on the largest loans in the pool and loans on the servicer’s watchlist. The June 2013 Monthly Surveillance Report for this transaction will be published shortly. If you are interested in receiving this report, contact us at info@dbrs.com.

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

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodologies are CMBS Rating Methodology (January 2012) and CMBS North American Surveillance Methodology (November 2012), which can be found on our website under Methodologies.