DBRS Assigns Provisional Ratings to NCF Dealer Floorplan Master Trust, Series 2016-1

DBRS, Inc. (DBRS) has today assigned provisional ratings to the following classes issued by NCF Dealer Floorplan Master Trust (NDFMT), Series 2016-1:

-- Series 2016-1 Notes, Class A rated A (sf)

The ratings are based on a review by DBRS of the following analytical considerations:
-- The transaction parties’ capabilities with regards to originations, underwriting and servicing and financial strength of the sponsor/servicer, Northpoint Commercial Finance LLC.
-- The quality and sufficiency of provided historical performance data for the wholesale portfolio.
-- The credit quality of the collateral and performance of NDFMT’s wholesale trust.
-- Northpoint’s portfolio is seasonal and subject to cyclicality, due to the product mix making up the portfolio.
-- Credit enhancement is sized to cover the risks associated with collateral migration. Additionally, if any of the items below exceed the respective percentages for those items, the Series 2016-1 available subordinated amount will increase on a dollar-to-dollar basis to offset any additional exposures.
-- Transaction capital structure, proposed ratings and form and sufficiency of available credit enhancement.
-- The transaction incorporates one level of collateral performance triggers that will increase credit enhancement if tripped. The triggers measure a three-month average default rate and three-month average payment rate.
-- Weak economic conditions could lead to depressed product sales and financial stress for dealers. As a consequence, dealers may experience financial hardship leading to a decline in monthly principal payment rates and an increase in the frequency of sales-out-of trust (SOT) or sold-and unpaid (SAU).
-- Should the Company’s financial condition suddenly deteriorate, the performance of the notes may potentially be affected. However, there are financial covenants in the structure to address this migration.
-- Portfolio Finance Servicing Company (PFSC) is the backup servicer for NDFMT’s wholesale transaction.
-- The legal structure and presence of legal opinions consistent with the DBRS Legal Criteria for U.S. Structured Finance Transactions.

Please see the attached appendix for additional information regarding sensitivity of assumptions used in the rating process.

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

The applicable methodology is Rating U.S. Wholesale Securitizations, which can be found on our website under Methodologies.

The full report providing additional analytical detail is available by clicking on the link or by contacting us at info@dbrs.com.