DBRS Finalizes AAA (sf) Rating on Hollis Receivables Term Trust II, Series 2013-1 Class A Notes

DBRS has today finalized the provisional rating of AAA (sf) on the Receivables-Backed Class A Notes, Series 2013-1 (the Class A Notes) issued by Hollis Receivables Term Trust II (the Trust). The Class B Notes are not rated by DBRS.

The Expected Final Payment Date is September 26, 2016.

The rating is based on the following factors:

(1) The level of credit enhancement provided by 17% subordination, excess spread of 3.5% after the swap and the cash reserve account, which could build up to 2% of the initial invested amount, is commensurate with the AAA (sf) rating assigned.

(2) The loss rate has been low and stable, ranging from 1% to 2% since 2009.

(3) The experience of Bank of Nova Scotia to manage a large, well-diversified, unsecured line of credit portfolio.

DBRS stress testing indicates that simultaneous declines in yield and payment rates and increases in losses would not result in a failure of the Trust in repaying the Class A Notes on a timely basis.
The Trust has incorporated DBRS’s partial commingling policy for revolving asset pools. DBRS believes that the partial commingling provisions mitigate potential losses to the Noteholders and also provide clarification to market participants with respect to the collection process if the seller/servicer is financially weakened.

Notes:
The applicable methodologies are Rating Canadian Structured Finance Transactions (August 2013), Legal Criteria for Canadian Structured Finance (September 2013) and Derivatives Criteria for Canadian Structured Finance (September 2013), which are available on our website under Methodologies.

The Rule 17g-7 Report of Representations and Warranties is 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 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.