Jan 14 - Fitch Ratings expects to assign the following ratings and Rating Outlooks to the notes issued by BMW Vehicle Lease Trust (BMWLT) 2013-1:
--Class A-1 asset-backed notes ‘F1+sf’;
--Class A-2 asset-backed notes ‘AAAsf’; Outlook Stable;
--Class A-3 asset-backed notes ‘AAAsf’; Outlook Stable;
--Class A-4 asset-backed notes ‘AAAsf’; Outlook Stable.
Key Rating Drivers
Stable Collateral Quality: The pool is consistent with that of 2012-1, with a strong WA FICO score of 764, seasoning of 9 months, a well-diversified residual value (RV) maturity schedule, a similar RV concentration (70.5%), and a consistent mix of original lease terms.
Adequate CE Structure: Initial credit enhancement (CE) has decreased by 0.50% from 2012-1, and will be 17.25% growing to 19.50% of the initial securitization value. Initial excess spread is expected to be 4.80%, consistent with 4.79% in 2012-1. Loss coverage is adequate to support Fitch’s ‘AAAsf’ stressed assumptions.
Strong Loss Performance: Credit and residual loss performance on BMW FS’s portfolio has improved dramatically from the elevated levels seen in 2008 and 2009. This is a result of strong obligor credit quality and a solid wholesale used vehicle market, leading to higher recovery rates and residual realizations.
Used Vehicle Market Uncertainty: While the wholesale vehicle market in the U.S. is currently strong, factors such as increased new vehicle sales and lease volumes could impact the health of the wholesale vehicle market in the future. Approximately 50.6% of base residuals mature in 2015, and the wholesale market may not be as strong at that time.
Legal Structure Integrity: The legal structure of the transaction should provide that a bankruptcy of BMW FS would not impair the timeliness of payments on the securities.
Stable Origination/Underwriting/Servicing: Fitch believes BMW FS to be a capable originator, underwriter, and servicer. These capabilities are further evidenced by historical portfolio delinquency and loss experience and securitization performance.
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