DBRS Morningstar Confirms Rating on MBARC Credit Canada Inc. 2019-A Class A-3 Asset Backed Notes

DBRS Limited (DBRS Morningstar) confirmed the AAA (sf) rating on the 2019-A Class A-3 Asset Backed Notes (the Class A-3 Notes) issued by MBARC Credit Canada Inc. as part of DBRS Morningstar’s continued effort to provide market participants with annual updates.

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 September 8, 2021, in its “Baseline Macroeconomic Scenarios For Rated Sovereigns” at https://www.dbrsmorningstar.com/research/384150. For the Class A-3 Notes, DBRS Morningstar considered impacts consistent with the baseline scenario in the referenced commentary in its analysis. The rating actions are based on the following factors as of July 2021:

(1) Total credit enhancement levels available remain high and continue to provide sufficient protection to the Class A-3 Notes at its current rating. The Class A-3 Notes are also protected by excess spread, which is available to cover monthly credit losses and any arising replacement servicer costs.

(2) The collateral for the Class A-3 Notes has been performing well, with cumulative credit gains of 32 basis points. In addition, the transaction benefits from cumulative residual value gains on returned vehicles, equivalent to 9.9% of the initial securitization value.

(3) Daimler AG (rated BBB (high) with a Stable trend by DBRS Morningstar), the parent company of Mercedes-Benz Financial Services Corporation, remains above investment grade as of August 2020.

The performance and characteristics of the trust pool and the Notes are available and updated each month in the Monthly Canadian ABS Report available at www.dbrsmorningstar.com. DBRS Morningstar monitors the performance of each transaction to identify any deviation from DBRS Morningstar’s expectation at issuance and to ensure the ratings remain appropriate. The review is predicated upon 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 can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.

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

The principal methodology is Master Canadian Structured Finance Surveillance Methodology (June 7, 2021), 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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