DBRS Requests Feedback for U.S. Retail Auto Loan Rating Methodology
NEW YORK — Executives from DBRS recently made the request for comments on the proposed rating methodology for U.S. asset-backed transactions backed by retail auto loans.
The company said the deadline for all comment submissions is Dec. 18. Individuals can send comments via e-mail to dbrsusretailautocomments@dbrs.com. DBRS noted that it will publish a final methodology following the review and evaluation of all submissions.
Executives went on to explain that the methodology provides an overview of the key factors which DBRS believes could impact the performance of U.S. retail auto loan ABS. They also noted the methodology should affect their approach for rating these transactions.
DBRS also articulated several rating factors:
— Quality of management and financial condition of sponsoring entity
— Originations, underwriting and servicing capabilities
— Collateral quality of the proposed auto loan pool and performance of sponsor's auto loan portfolio
— Transaction capital structure, proposed ratings and credit enhancement
— Cash flow analysis
— Legal structure and opinions
As part of the rating process, DBRS officials indicated that they perform an operational risk review and assessment of the sponsoring entity's origination and servicing capabilities. They said this allows them to provide insight into the manner in which these processes have impacted past pool performance and to assist in establishing expectations for future performance.
For each requested rating, the company can develop cash flow stress assumptions based upon the proposed transaction structure to test the financial viability of the transaction under various scenarios.
For more details about this process, DBRS executives instructed individuals to this page on its Web site.