Fitch Rates Enterprise Fleet Financing, LLC Series 2016-1

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has assigned the following ratings and Outlooks to the Enterprise Fleet Financing, LLC Series 2016-1 (EFF 2016-1) notes:

--$232,000,000 class A-1 notes 'F1+sf';

--$447,000,000 class A-2 notes 'AAAsf'; Outlook Stable;

--$119,800,000 class A-3 notes 'AAAsf'; Outlook Stable.

KEY RATING DRIVERS

Strong Credit Quality Obligors: Although the vast majority of the collateral is not rated by any nationally recognized statistical rating organization (NRSRO), EFM's portfolio has experienced minimal delinquencies and net losses. In its analysis, Fitch assumed a 'B' rating for unrated obligors.

Strong Portfolio Diversification: Obligor and industry concentrations are minimal. The single most concentrated obligor represents 0.70% of the pool, while the top industry-construction represents only approximately 8.20%. However, consistent with prior transactions, there is a large concentration of light and medium duty trucks, which comprise approximately 83% of the pool.

Low Delinquency and Loss History: EFM's historical managed portfolio and prior transaction delinquency and loss experience has been low, even during periods marked by elevated levels in other consumer and commercial asset classes due to a weak economy.

Sufficient Credit Enhancement (CE): Initial hard CE is virtually unchanged from the 2015-2 transaction. Total initial CE (8.63%) is sufficient to support Fitch's 'AAAsf' stressed loss assumption of 11.4%.

Minimal Residual Risk: Approximately 97% of the 2016-1 leases are open-end leases, meaning the lessees bear the residual risk. The remaining 3% are closed-end leases, under which the trust will bear the wholesale market risk.

Quality Origination, Underwriting and Servicing Platform: EFM has demonstrated adequate capabilities as originator, underwriter and servicer, as evidenced by historical delinquency and loss performance of securitized trusts and the managed portfolio.

RATING SENSITIVITIES

Unanticipated increases in the frequency of defaults could produce default levels higher than the projected base case default proxy and impact available default coverage and multiples levels. Lower default coverage could impact ratings and Rating Outlooks, depending on the extent of the decline in coverage. In Fitch's initial review of the transaction, the notes were found to have limited sensitivity to changes in obligor credit profiles and recovery rates associated with the concentration of oil and gas collateral in the pool. Further details can be found in the presale report.

Key Rating Drivers and Rating Sensitivities are further detailed in the accompanying presale report, available at 'www.fitchratings.com' or by clicking on the above link.

DUE DILIGENCE USAGE

Fitch was provided with third-party due diligence information from Ernst & Young LLP. The third-party due diligence focused on comparing or recalculating certain information with respect to 150 leases. Fitch considered this information in its analysis and the findings did not have an impact on our analysis/conclusions. A copy of the ABS Due Diligence Form-15E received by Fitch in connection with this transaction may be obtained through the link at the bottom of the rating action commentary.

Key Rating Drivers and Rating Sensitivities are further described in the presale report dated Feb. 4, 2016. Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'Enterprise Fleet Financing, LLC 2016-1 -Appendix'. These R&Ws are compared to those of typical R&W for the asset class as detailed in the special report 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' dated January 2016.

Key Rating Drivers and Rating Sensitivities are further described in the accompanying presale report, available at 'www.fitchratings.com' or by clicking on the link.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria

Criteria for Rating U.S. Auto Lease ABS (pub. 19 Oct 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=872539

Global Rating Criteria for CLOs and Corporate CDOs (pub. 12 Nov 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=873664

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Related Research

Enterprise Fleet Financing, LLC Series 2016-1 - Appendixhttps://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=877476

Additional Disclosures

Dodd-Frank Rating Information Disclosure Formhttps://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=999591

ABS Due Diligence Form 15E 1https://www.fitchratings.com/creditdesk/press_releases/content/ridf15E_frame.cfm?pr_id=999591&flm_nm=15e_999591_1.pdf

Solicitation Statushttps://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=999591

Endorsement Policyhttps://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160217006450/en/

Fitch Ratings
Primary Analyst:
Margaret Rowe, +1-312-368-3167
Director
Fitch Ratings, Inc.
70 W Madison Street
Chicago, IL 60602
or
Secondary Analyst:
Timothy McNally, +1-212-908-0830
Associate Director
or
Committee Chairperson:
Hylton Heard, +1-212-908-0214
Senior Director
or
Hannah James, +1-646-582-4947
New York
[email protected]

Source: Fitch Ratings

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