Press Release

DBRS Morningstar Finalizes Provisional Credit Ratings on Merchants Fleet Funding LLC, Series 2023-1

October 20, 2023

DBRS, Inc. (DBRS Morningstar) finalized its provisional credit ratings on the following classes (together, the Notes) to be issued by Merchants Fleet Funding LLC, Series 2023-1 (the Transaction):

-- $327,360,00 Class A Notes at AAA (sf)
-- $15,780,000 Class B Notes at AA (sf)
-- $23,160,000 Class C Notes at A (sf)
-- $21,060,000 Class D Notes at BBB (sf)
-- $12,640,000 Class E Notes at BB (sf)

The credit ratings on the Notes are based on DBRS Morningstar’s review of the following considerations:
-- Transaction capital structure, proposed credit ratings, and form and sufficiency of available credit enhancement.
-- Credit enhancement levels are sufficient to support DBRS Morningstar stressed loss assumptions under various 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 in which they have invested. The credit ratings address the payment of timely interest on a monthly basis and principal by the Legal Final Maturity.
-- Merchants Fleet Funding LLC’s (Merchants) capabilities with regard to originations, underwriting, and servicing.
-- DBRS Morningstar continues to deem Merchants as acceptable originators and servicers of fleet leases.
-- The high credit quality obligors given strong 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 no set-off language. The lessee is responsible to pay all taxes, title, and registration charges.
--The transaction assumptions consider DBRS Morningstar’s baseline macroeconomic scenarios for rated sovereign economies, available in its commentary Baseline Macroeconomic Scenarios For Rated Sovereigns: September 2023 Update, published on September 28, 2023. These baseline macroeconomic scenarios replace DBRS Morningstar’s moderate and adverse Coronavirus Disease (COVID-19) pandemic scenarios, which were first published in April 2020.

DBRS Morningstar’s credit rating on the Notes addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations are the Class Monthly Interest and Class Invested Amount.

DBRS Morningstar’s credit ratings do not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction document(s) that are not financial obligations. For example, the Class A Additional Interest, Class B Additional Interest, Class C, Additional Interest, Class D Additional Interest, and Class E Additional Interest.

DBRS Morningstar’s long-term credit ratings provide opinions on risk of default. DBRS Morningstar considers risk of default to be the risk that an issuer will fail to satisfy the financial obligations in accordance with the terms under which a long-term obligation has been issued. The DBRS Morningstar short-term debt rating scale provides an opinion on the risk that an issuer will not meet its short-term financial obligations in a timely manner.

There were no Environmental/Social/Governance factor(s) that had a significant or relevant effect on the credit analysis.

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 (July 4, 2023).

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

The principal methodology applicable to the credit ratings is Rating U.S. Auto Fleet Lease Securitizations (September 25, 2023;

Other methodologies referenced in this transaction are listed at the end of this press release.

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:

The credit rating was initiated at the request of the rated entity.

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

DBRS Morningstar had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

This is a solicited credit rating.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the credit rating process.

DBRS, Inc.
140 Broadway, 43rd Floor
New York, NY 10005 USA
Tel. +1 212 806-3277

The credit rating methodologies used in the analysis of this transaction can be found at:

Rating U.S. Auto Lease Securitizations (November 2, 2022;

Operational Risk Assessment for U.S. ABS Servicers (July 20, 2023;

Operational Risk Assessment for U.S. ABS Originators (July 20, 2023;

Legal Criteria for U.S. Structured Finance (December 7, 2022;

Rating U.S. Structured Finance Transactions (September 25, 2023;

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