![]() Our analysis has considered the effect on the performance of corporate assets from a gradual and unbalanced recovery in US economic activity.We regard the coronavirus outbreak as a social risk under our ESG framework, given the substantial implications for public health and safety.PRINCIPAL METHODOLOGYThe principal methodology used in these ratings was "Moody's Approach to Rating ABS Backed by Equipment Leases and Loans" published in December 2020 and available at. As a result, there is a heightened degree of uncertainty around our forecasts. While persistent virus fears remain the main risk for a recovery in demand, the economy will recover faster if vaccines and further fiscal and monetary policy responses bring forward a normalization of activity. ![]() Although global economies have shown a remarkable degree of resilience to date and are returning to growth, the uneven effects on individual businesses, sectors and regions will continue throughout 2021 and will endure as a challenge to the world's economies well beyond the end of the year. The transaction's payment structure and the overcollateralization target will result in a rapid build-up of credit enhancement in the transaction.The coronavirus pandemic has had a significant impact on economic activity. Excess spread may also be available as additional credit protection for the notes. Hard credit enhancement will consist of initial overcollateralization of 4.45%, with a target of 6.00% of the initial collateral balance and a cash reserve account of 1.25%. Both DLL Finance and De Lage Landen Finance, LLC are indirect wholly owned subsidiaries of Rabobank (Aa3 stable).The notes will be backed by a pool of loans and leases secured by new and used agricultural equipment originated by AGCO Finance.The complete rating actions are as follows:Issuer: DLLAA 2021-1 LLCClass A-1 Asset Backed Notes, Assigned (P)P-1 (sf)Class A-2 Asset Backed Notes, Assigned (P)Aaa (sf)Class A-3 Asset Backed Notes, Assigned (P)Aaa (sf)Class A-4 Asset Backed Notes, Assigned (P)Aaa (sf)RATINGS RATIONALEThe ratings of the notes are based on (1) the credit quality of the underlying equipment contracts including, among other factors, the equipment types and the characteristics of the obligors (2) the pool's expected credit performance, while factoring in the historical performance of AGCO Finance's prior securitizations and managed portfolio (3) the experience and expertise of AGCO Finance as the originator and DLL Finance as the servicer of the securitized pool (4) the strength of the transaction structure including, among other factors, the pay structure and levels of credit enhancements at closing and (5) the legal aspects of the transaction.Additionally, we base our (P)P-1 (sf) rating of the Class A-1 notes on the cash flows that we expect the underlying receivables to generate during the collection periods prior to the Class A-1 notes' legal final maturity date on May 2022.Moody's cumulative net loss expectation for the DLLAA 2021-1 collateral pool is 0.90% and the loss at a Aaa stress is 9.00% (inclusive of 6.25% credit loss and 2.75% residual value loss).Moody's based its cumulative net loss expectation and the loss at a Aaa stress for the DLLAA 2021-1 transaction on an analysis of the credit quality of the securitized pool the historical performance of similar collateral, including credit performance of prior AGCO Finance sponsored securitizations, as well as AGCO Finance managed portfolio credit performance and residual values realization of similar equipment the ability, experience and expertise of DLL Finance to perform the servicing functions and our current expectations for the macroeconomic environment and the agriculture sector during the life of the transaction.At closing the Class A notes will benefit from 5.70% of hard credit enhancement (as a percentage of the initial pool balance). DLL Finance, LLC (DLL Finance ) will be the servicer for this transaction. ![]() ![]() The transaction will be the second securitization sponsored by AGCO Finance LLC (AGCO Finance), a joint venture between De Lage Landen Finance, LLC (51% ownership) and AGCO Corporation (49% ownership Baa3 stable).AGCO Finance is also the originator of the assets backing the transaction. Rating Action: Moody's assigns provisional ratings to second agricultural equipment term ABS transaction originated by AGCO FinanceGlobal Credit Research - New York, Ap- Moody's Investors Service (Moody's) has assigned provisional ratings to the notes to be issued by DLLAA 2021-1 LLC (the issuer).
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