DBRS Produces Final Rating Methodology
NEW YORK — DBRS has published its final rating methodology for U.S. wholesale auto loan asset-backed transactions.
The company indicated its final methodology does not have any substantive changes from the proposed wholesale loan methodology, which was published on Oct. 21 with a request for comments.
Executives explained the methodology provides an overview of the key factors which DBRS believes could impact the performance of U.S. wholesale ABS and their approach for rating these transactions. DBRS included six specific factors:
—Creditworthiness and business profile of vehicle manufacturer.
—Operational and servicing capabilities of finance company as servicer.
—Profile of dealer base and concentrations within dealer base.
—Capital structure, proposed ratings and credit enhancement.
—Liquidation and cash flow analysis.
—Legal structure and opinions.
"As part of the rating process, DBRS performs an operational risk review and assessment of the finance company's operational and servicing capabilities with particular focus on monitoring dealer inventories and sales of vehicles," company officials explained.
"For each requested rating, DBRS develops cash flow stress assumptions based upon the proposed transaction structure to test the viability of the transaction under various scenarios," they went on to state.
DBRS also mentioned that its criteria and methodologies are available on its Web site.