DBRS Assigned Provisional Ratings to Flagship Credit Auto Trust 2016-2

DBRS, Inc. (DBRS) has today assigned provisional ratings to the following classes issued by Flagship Credit Auto Trust 2016-2:

-- Series 2016-2, Class A-1 rated AAA (sf)
-- Series 2016-2, Class A-2 rated AA (high) (sf)
-- Series 2016-2, Class B rated A (high) (sf)
-- Series 2016-2, Class C rated BBB (sf)
-- Series 2016-2, Class D rated BB (high) (sf)

The ratings are based on DBRS’s review of the following analytical considerations:
-- Transaction capital structure, proposed ratings and form and sufficiency of available credit enhancement.
-- Credit enhancement is in the form of overcollateralization, subordination, amounts held in the reserve fund and excess spread. Credit enhancement levels are sufficient to support the DBRS-projected expected cumulative net loss assumption under various stress scenarios.
-- The ability of the transaction to withstand stressed cash flow assumptions and repay investors according to the terms under which they have invested. For this transaction, the rating addresses the payment of timely interest on a monthly basis and the payment of principal by the legal final maturity date.
-- The strength of the combined organization after the merger of Flagship Credit Acceptance LLC (Flagship or the Company) and CarFinance Capital LLC.
-- DBRS views the merger of the two companies as providing synergies that make the combined company more financially stable and competitive.
-- The capabilities of Flagship with regard to originations, underwriting and servicing.
-- DBRS has performed an operational review of Flagship and considers the entity to be an acceptable originator and servicer of subprime automobile loan contracts with an acceptable backup servicer.
-- The Flagship senior management team has considerable experience and a successful track record within the auto finance industry.
-- DBRS used a proxy analysis in its development of an expected loss.
-- A limited amount of performance data was available for the Company’s current originations mix.
-- A combination of Company-provided performance data and industry comparable data were used to determine an expected loss.
-- The legal structure and presence of legal opinions that address the true sale of the assets to the Issuer, the non-consolidation of the special-purpose vehicle with Flagship, that the trust has a valid first-priority security interest in the assets and the consistency with DBRS’s “Legal Criteria for U.S. Structured Finance” methodology.

Notes:
The applicable methodology is Rating U.S. Retail Auto Loan 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.

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

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