Morningstar DBRS Assigns AA (sf) Credit Rating to AT&T Receivables Funding, LLC

DBRS, Inc. (Morningstar DBRS) assigned a AA (sf) credit rating to the September 26, 2024 Investment (the Investment) and yield created under the Second Receivables Purchase Agreement dated September 28, 2017 (as amended to date, the Purchase Agreement) among AT&T Receivables Funding, LLC as the Seller; New Cingular Wireless PCS, LLC, doing business as AT&T Mobility, as the Servicer; the pool purchaser agents from time to time and the pool purchasers from time to time; and Citibank, N.A. (rated AA (low) with a Stable trend by Morningstar DBRS) as the Agent. The Investment was made in an amortizing pool of receivables originated by AT&T Mobility for obligors to finance the purchase of mobile phones and similar devices and was sold by the Seller under the Purchase Agreement.

CREDIT RATING RATIONALE/DESCRIPTION
The credit rating is based on Morningstar DBRS' review of the following analytical considerations:

-- Transaction advance rate, form and sufficiency of available credit enhancement, and the assigned credit rating. The transaction benefits from (1) credit enhancement in the form of overcollateralization, implied excess spread, and a full turbo structure, in which credit enhancement levels are sufficient to support the Morningstar DBRS expected loss under various stress scenarios; and (2) other advantages provided by the structured Investment, including (A) a discrete pool of assets via specified selection criteria, and (B) the application of conservative assumptions in the stress analysis.
-- Morningstar DBRS has performed an operational review of the Servicer of the receivables and considers the entity an acceptable servicer of handset loans.
-- Morningstar DBRS was provided sufficient performance data from program-originated contracts.
-- The transaction pool contains high-quality collateral.
-- The transaction assumptions consider Morningstar DBRS' baseline macroeconomic scenarios for rated sovereign economies, available in its commentary "Baseline Macroeconomic Scenarios for Rated Sovereigns September 2024 Update," published on September 25, 2024. These baseline macroeconomic scenarios replace Morningstar DBRS' moderate and adverse COVID-19 pandemic scenarios, which were first published in April 2020.
-- The legal structure and presence of legal opinions that address the true sale of the assets to the purchasers; the nonconsolidation of the special-purpose vehicles with AT&T Receivables Funding, LLC; and that the purchasers have a valid first-priority security interest in the assets and are consistent with the Morningstar DBRS "Legal Criteria for U.S. Structured Finance."

Morningstar DBRS' credit rating on the obligation referenced herein addresses the credit risk associated with the identified financial obligations in accordance with the relevant transaction documents. The associated financial obligations for the rated obligation are certain yield amounts and the Investment amount.

Morningstar DBRS' credit rating does not address nonpayment risk associated with contractual payment obligations contemplated in the applicable transaction documents that are not financial obligations. The associated contractual payment obligation that is not a financial obligation is the increased yield amount if an early amortization event has occurred.

Morningstar DBRS' long-term credit ratings provide opinions on risk of default. Morningstar DBRS 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 Morningstar DBRS 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.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (August 13, 2024) at https://dbrs.morningstar.com/research/437781.

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

The principal methodology applicable to the credit rating is Rating U.S. Structured Finance Transactions (Appendix I: U.S. Consumer Loan ABS Transactions) (August 6, 2024), https://dbrs.morningstar.com/research/437571.

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

The credit rating was not 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.

Morningstar DBRS 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.
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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: https://dbrs.morningstar.com/about/methodologies.

-- Rating U.S. Structured Finance Transactions (August 6. 2024), https://dbrs.morningstar.com/research/437571
-- Operational Risk Assessment for U.S. ABS Originators and Servicers (August 6, 2024), https://dbrs.morningstar.com/research/437545
-- Interest Rate Stresses for U.S. Structured Finance Transactions (February 26, 2024), https://dbrs.morningstar.com/research/428623
-- Legal Criteria for U.S. Structured Finance (April 15, 2024), https://dbrs.morningstar.com/research/431205

For more information on this credit or on this industry, visit https://dbrs.morningstar.com or contact us at info-DBRS@morningstar.com.