DBRS Assigns Provisional Ratings to Hertz Fleet Lease Funding LP, Series 2017-1

DBRS, Inc. (DBRS) has today assigned provisional ratings to the following classes issued by Hertz Fleet Lease Funding LP, Series 2017-1:

-- Series 2017-1, Class A-1* rated AAA (sf)
-- Series 2017-1, Class A-2* rated AAA (sf)
-- $7,725,000 Series 2017-1, Class B rated AA (high) (sf)
-- $7,425,000 Series 2017-1, Class C rated A (high) (sf)
-- $7,275,000 Series 2017-1, Class D rated BBB (high) (sf)
-- $10,875,000 Series 2017-1, Class E rated BBB (sf)

*The combination of Classes A-1 and A-2 is expected to equal $266.7 million.

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 levels are sufficient to support DBRS stressed loss assumptions under various stress scenarios.
-- The yield supplement account is established to supplement the yield from any lease that does not meet a minimum yield requirement.
-- The Transaction’s ability to withstand stressed cash flow assumptions and repay investors according to the terms in which they have invested. The rating addresses the payment of timely interest on a monthly basis and principal by the legal final maturity date.
-- Donlen Corporation’s (Donlen) capabilities with regard to originations, underwriting and servicing.
-- DBRS has performed an operational review of Donlen and considers the company to be an acceptable originator and servicer.
-- The high credit quality and historical performance of the Collateral.
-- The leased vehicles are essential use vehicles for customers; therefore, such leases are likely to be affirmed by an obligor in a bankruptcy proceeding.
-- These leases are hell-or-high water and triple net with:
-- No setoff language and
-- Lessee responsible for all taxes/expenses.
-- The legal structure and presence of legal opinions that address the true sale of the assets, the non-consolidation of the Issuer with Donlen, the Issuer’s valid first-priority security interest in the assets and the consistency with the DBRS “Legal Criteria for U.S. Structured Finance” methodology.

The Transaction represents the fifth 144A term securitization completed by Donlen and issued out of the Hertz Fleet Lease Funding LP (the Issuer) platform.

The Transaction’s collateral consists of the following (collectively, the Collateral):
-- A Group I Loan Note from the Borrower backed by a special unit of beneficial interest in leases and the related vehicles owned by the Origination Trust.
-- The Issuer’s rights under each hedging agreement entered into by the Issuer as required by the Base Indenture.
-- The Group I collection account and all monies on deposit from time to time therein.

Credit Enhancement Summary
-- The Class A credit enhancement is 14.10% and consists of subordination (10.82%), overcollateralization (OC; 2.56%) and initial cash reserve (0.73%).
-- The Class B credit enhancement is 11.60% and consists of subordination (8.31%), OC (2.56%) and initial cash reserve (0.73%).
-- The Class C credit enhancement is 9.18% and consists of subordination (5.90%), OC (2.56%) and initial cash reserve (0.73%).
-- The Class D credit enhancement is 6.82% and consists of subordination (3.53%), OC (2.56%) and initial cash reserve (0.73%).
-- The Class E credit enhancement is 3.29% and consists of OC (2.56%) and initial cash reserve (0.73%).

The cash reserve account amortizes to a floor equal to half of the initial amount. All credit enhancement figures are percentages of the outstanding securitization value.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is Rating U.S. Auto Fleet Lease Securitizations, which can be found on dbrs.com under Methodologies.

The rated entity or its related entities did participate in the rating process. DBRS had access to the accounts and other relevant internal documents of the rated entity or its related entities.

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

The full report providing additional analytical detail is available by clicking on the link under Related Research at the right of the screen or by contacting us at info@dbrs.com.

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