Ford Credit Auto Owner Trust 2019-REV1 Notes Assigned Preliminary Ratings

OVERVIEW
  • Ford Credit Auto Owner Trust 2019-REV1's issuance is an ABS transaction backed by prime auto loan receivables.
  • We assigned our preliminary ratings to the class A, B, and C notes.
  • The preliminary ratings reflect our view of the transaction's credit enhancement, pool characteristics, and Ford Motor Credit Co. LLC's extensive securitization performance history, among other factors.
 
NEW YORK (S&P Global Ratings) Jan. 10, 2019--S&P Global Ratings today assigned 
its preliminary ratings to Ford Credit Auto Owner Trust 2019-REV1's 
asset-backed notes series 2019-REV1 (see list).

The note issuance is asset-backed securities (ABS) transaction backed by prime 
auto loan receivables.

The preliminary ratings are based on information as of Jan. 10, 2019. 
Subsequent information may result in the assignment of final ratings that 
differ from the preliminary ratings.

The preliminary ratings reflects: 
  • The transaction's initial revolving phase (up to five years), during which loan collections may be used to purchase additional receivables. The structure includes pool composition requirements, a credit enhancement test, and amortization triggers intended to limit deterioration in pool quality and credit enhancement during this period.
  • The availability, when the receivables pool meets the pool composition tests, of approximately 17.8%, 14.6%, and 11.5% credit support to the class A, B, and C notes, respectively, based on stressed break-even cash flow scenarios. These credit support levels provide coverage of 4.75x, 4.00x, and 3.00x to the class A, B, and C notes, respectively, our expected net loss of 2.85% assuming a worst-case pool mix).
  • The availability, when the receivables pool meets the floor credit enhancement composition tests, of approximately 16.5%, 13.1%, and 10.0% credit support to the class A, B, and C notes, respectively, based on stressed break-even cash flow scenarios. These credit support levels provide coverage of 4.75x, 4.00x, and 3.00x our expected net loss of 2.50% (assuming a worst-case pool mix) to the class A, B, and C notes, respectively. The floor credit enhancement composition tests are met when the receivables pool meets a higher credit quality threshold compared with the pool composition tests.
  • Our expectation that during the amortization phase and under a moderate ('BBB') stress scenario, the ratings on the class A and B notes would remain within one rating category of our preliminary 'AAA (sf)' and 'AA (sf)' ratings, respectively, and the rating on the class C notes would remain within two rating categories of our preliminary 'A (sf)' rating within one year. These potential rating movements are consistent with our credit stability criteria (see "Methodology: Credit Stability Criteria," published May 3, 2010).
  • The credit enhancement in the form of subordination, a reserve account, the yield supplement overcollateralization amount (YSOA), and excess spread.
  • The net loss test, which increases the required credit enhancement in the form of the YSOA as long as three-month annualized net losses exceed 2.50% during the revolving period.
  • The timely interest and full principal payments made under stressed cash flow modeling scenarios appropriate to the assigned preliminary ratings.
  • The characteristics of the revolving pool being securitized, including a weighted average minimum FICO score of 700 at time of origination.
  • Ford Motor Credit Co. LLC's (Ford Credit's) extensive securitization performance history dating back to 1989.
  • The transaction's pool composition tests, credit enhancement test, amortization triggers, turbo payment structure when in any amortization period, and legal structure.
The preliminary ratings do not address whether the cash flows generated by the 
pool of receivables will be sufficient to pay the step-up amounts or 
make-whole payments, which may become payable to the noteholders if certain 
events occur.