DBRS Morningstar Publishes Updated Legal Criteria for U.S. Structured Finance Methodology

DBRS Morningstar published an updated version of “Legal Criteria for U.S. Structured Finance” (the Methodology).

DBRS Morningstar has made a non-material change to the Methodology, reflecting a change in rating expectations for indenture trustees to BBB (low) from BBB (high). In assessing indenture trustees, DBRS Morningstar believes that an investment-grade rated entity maintains the financial and operational capabilities to perform the administrative responsibilities of indenture trustees in securitizations. From a credit perspective, in the U.S., trust accounts are set up to hold cash and protect the movement of cash from obligors to repay investors in accordance with a transaction’s legal documents (i.e., acting in the capacity of an account bank). Any indenture trustee that also acts as an account bank is, therefore, expected to comply with our criteria for “Eligible Institutions,” which are expected to hold a rating of at least an R-1 (low) short-term rating or a BBB (high) long-term rating.

This update supersedes the previous version published on December 9, 2021, and is effective as of June 15, 2022. DBRS Morningstar deems the update not to be material and has determined that no ratings are expected to change as a result of this update.

Notes:
The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/384482.

DBRS Morningstar methodologies are publicly available on its website www.dbrsmorningstar.com under Methodologies & Criteria.

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