DBRS Morningstar Confirms Ratings of Series 2018-1 and Series 2019-1 Notes Issued by WTH Car Rental ULC

DBRS Limited (DBRS Morningstar) confirmed the ratings of the following notes (collectively, the Notes) issued by WTH Car Rental ULC as part of DBRS Morningstar’s continued effort to provide market participants with updates on an annual basis:

-- Fixed Rate Asset-Backed Notes, Series 2018-1 at AAA (sf)
-- Fixed Rate Asset-Backed Notes, Series 2019-1 at AAA (sf)

DBRS Morningstar initially published its outlook on the Coronavirus Disease (COVID-19) pandemic’s impact on key economic indicators for the 2020–22 time frame in April 2020. DBRS Morningstar last updated the macroeconomic scenarios on January 28, 2021, in its “Global Macroeconomic Scenarios: January 2021 Update” at https://www.dbrsmorningstar.com/research/372843. For the rated Notes, DBRS Morningstar considered impacts consistent with the moderate scenario in the referenced commentary in its analysis. The rating confirmations are based on the following factors as of December 2020:

(1) High and dynamic credit enhancement level in the form of overcollateralization and a letter of credit and/or cash. The Notes are protected by dynamic credit enhancement that was sized on the assumption that the fleet would have to be liquidated at any point throughout the year prior to the Expected Final Payment Date of the Notes. Required enhancement levels for Program Vehicles are determined by the credit rating of the manufacturer of the underlying vehicles. For Nonprogram Vehicles, the required enhancement level can increase if losses experienced on the disposition of the Nonprogram Vehicles exceed a specified threshold.

(2) Experienced Administrator. WTH Funding Limited Partnership has a long, successful track record of managing the acquisition and disposition of WTH Car Rental ULC’s Vehicle Fleet through challenging economic cycles. The transaction is also supported by structural protections. Conservative depreciation rates have historically been applied to Nonprogram Vehicles, resulting in gains on dispositions.

(3) The transaction continues to perform well and is within DBRS Morningstar’s expected parameters, as defined at the onset of the transaction.

The Notes are repaid through the collection of proceeds arising from the payments received from the lease of the Vehicle Fleet pursuant to the Master Lease Agreement, the repurchase of Program Vehicles by the Program Vehicle Manufacturers, and the sale of Nonprogram Vehicles.

DBRS Morningstar monitors the performance of the transaction to identify any deviation from its expectation of the Notes at issuance and to ensure that the ratings remain appropriate. The review is predicated on the timely receipt of performance information from the related providers.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is the Master Canadian Structured Finance Surveillance Methodology (August 31, 2020), which can be found on dbrsmorningstar.com under Methodologies & Criteria.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

For more information regarding the structured finance rating approach and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/359905.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link under Related Documents or by contacting us at [email protected].

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar 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.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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