DBRS Assigns Provisional Ratings to Hertz Fleet Lease Funding LP, Series 2019-1

DBRS, Inc. (DBRS) assigned provisional ratings to the following classes issued by Hertz Fleet Lease Funding LP, Series 2019-1 (the Issuer):

-- Series 2019-1, Class A-1 Notes rated AAA (sf)
-- Series 2019-1, Class A-2 Notes rated AAA (sf)
-- $10,300,000 Series 2019-1, Class B Notes rated AA (high) (sf)
-- $9,900,000 Series 2019-1, Class C Notes rated A (high) (sf)
-- $9,700,000 Series 2019-1, Class D Notes rated BBB (high) (sf)
-- $14,500,000 Series 2019-1, Class E Notes rated BBB (sf)

The combination of Class A-1 and Class A-2 (together, Class A) is expected to equal $355.6 million.

RATING RATIONALE:

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 under which they have invested. The ratings address the timely payment of 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
(1) No set-off language and
(2) Lessees are 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 seventh 144A term securitization completed by Donlen and is issued out of the Issuer’s platform.

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

The cash reserve account amortizes to a floor equal to approximately 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 methodologies are Rating U.S. Auto Fleet Lease Securitizations and Rating U.S. Auto Lease Securitizations, which can be found on dbrs.com under Methodologies & Criteria.

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

Please see the related 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 Documents below 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.

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