DBRS is requesting comments on the proposed rating methodology for U.S. asset-backed transactions (ABS) backed by wholesale auto loans.
The rating agency set a November 21st deadline for comments and plans to publish a final methodology following the review and evaluation of all submissions.
The methodology provides an overview of the key factors which DBRS believes could impact the performance of U.S. wholesale auto ABS and our approach for rating these transactions. These factors include: 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; and 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.
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.