DBRS Publishes Updated Methodologies for Canadian Trade Receivables ABS Transactions

DBRS Limited (DBRS) has today published an updated methodology regarding the rating approach for Canadian trade receivables asset-backed (ABS) transactions. The methodology outlines the key factors analyzed, which include:

-- Quality of originations and underwriting practices;
-- Quality of servicing capabilities;
-- Obligor concentration analysis;
-- Evaluation of dynamic credit enhancement factors, including reserves for credit losses, dilutions, cost of funds and replacement servicer; and
-- Legal risks, opinions and commingling.

In an effort to provide global consistency to DBRS trade receivables transactions, the Canadian methodology has updated the stress applied to the loss proxy at the ratings levels noted below:

AAA: 2.5x
AA: 2.25x
A: 2.0x
BBB: 1.75x

Additional changes made to the updated Rating Canadian Trade Receivables Transactions are generally editorial in nature, including clarification of certain criteria and the removal of a couple of sections that are more appropriately addressed in other Canadian Structured Finance criteria or methodologies.

All outstanding DBRS-rated trade receivables transactions meet the criteria set forth in the updated methodology. Accordingly, no rating actions will be taken on any outstanding transactions.

DBRS criteria and methodologies are publicly available on its website www.dbrs.com under Methodologies.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.