DBRS Finalizes Provisional Ratings on United Auto Credit Securitization Trust 2017-1

DBRS, Inc. (DBRS) has today finalized the provisional ratings on the following classes of notes issued by United Auto Credit Securitization Trust 2017-1 (the Issuer):

-- $69,200,000 Series 2017-1, Class A Notes rated AAA (sf)
-- $20,800,000 Series 2017-1, Class B Notes rated AA (sf)
-- $19,600,000 Series 2017-1, Class C Notes rated A (sf)
-- $21,700,000 Series 2017-1, Class D Notes rated BBB (sf)
-- $16,200,000 Series 2017-1, Class E notes rated BB (low) (sf)

The ratings are based on a review by DBRS of the following analytical considerations:

-- Transaction capital structure, proposed ratings and form and sufficiency of available credit enhancement.
-- The transaction benefits from credit enhancement in the form of overcollateralization, subordination, amounts held in the reserve fund and excess spread. Credit enhancement levels are sufficient to support DBRS-projected expected cumulative net loss assumptions 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 ratings address the timely payment of interest on a monthly basis and principal by the legal final maturity date.
-- United Auto Credit Corporation’s (UACC or the Company) capabilities with regard to originations, underwriting and servicing and the existence of an experienced and capable backup servicer.
-- DBRS has performed an operational review of UACC and considers the entity to be an acceptable originator and servicer of subprime automobile loan contracts with an acceptable backup servicer.
-- UACC’s senior management team has considerable experience and a successful track record within the auto finance industry.
-- The Company successfully consolidated its business into a centralized servicing platform and has consolidated originations to two regional buying centers. UACC retained experienced managers and staff at the servicing center and buying centers.
-- UACC continues to evaluate and fine-tune its underwriting standards as necessary. The Company has a risk management system, centralized oversight of all underwriting and improved its technology system to provide daily metrics on all originations, servicing and collection of loans.
-- The credit quality of the collateral and performance of UACC’s auto loan portfolio.
-- UACC’s origination of collateral, which has a shorter term, higher down payment, lower book value and higher income requirements than some subprime auto loan originators.
-- 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 UACC, that the trust has a valid first-priority security interest in the assets and the consistency with the DBRS methodology “Legal Criteria for U.S. Structured Finance.”

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

The principal methodology is Rating U.S. Retail Auto Loan 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 the attached appendix for additional information regarding the 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.