DBRS Assigns Rating to the Liquidity Agreement Supporting HK Extended 2014-1 within Institutional Secured Funding

DBRS has assigned a AAA (sf) rating to the Liquidity Agreement (LA), dated as of August 13, 2014, supporting HK Extended 2014-1 within Institutional Secured Funding. The rating addresses the timely payment of interest and ultimate payment of principal. The rating addresses a full-term amortizing loan facility secured by a discrete pool of auto loans originated and serviced by a captive finance company (the Company).

Consistent with the Rating U.S. Retail Auto Loan Securitizations methodology and as part of the operational risk review of an originator and servicer, DBRS typically performs an on-site visit or has a call with the originator and servicer. For this transaction, DBRS was asked to provide the rating by a liquidity provider, not the servicer or any affiliate. This resulted in limited access to the Company; consequently, no on-site review or call was conducted by DBRS. DBRS deems the operational capacity to be acceptable, with potential risks related to not conducting an on-site review or call mitigated by a number of factors, including the following:

(1) The Company is rated investment grade by two Nationally Recognized Statistical Rating Organizations.
(2) The DBRS Financial Institutions Group has reviewed the Company’s financials and provided a private rating to the DBRS analytical team.
(3) The Company has sponsored numerous securitizations of auto loans supported by its own originated collateral for over 20 years and serviced transactions over the last 13 years. DBRS deems the Company to be a very experienced originator and servicer, which is demonstrated by strong performance on its outstanding transactions.
(4) DBRS held discussions with the liquidity provider regarding the Company’s origination and servicing capabilities, and reviewed credit materials prepared in connection with this transaction.

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

The principal methodologies are Asset-Backed Commercial Paper Criteria Report: U.S. & European ABCP Conduits and Rating U.S. Retail Auto Loan Securitizations, both of which can be found on the DBRS website.