Verizon Owner Trust 2019-A Notes Assigned Ratings

  • Verizon Owner Trust 2019-A's issuance is an ABS transaction backed by a revolving pool of wireless device payment plan agreement receivables.
  • We assigned our ratings to the class A-1a, A-1b, B, and C notes.
  • The ratings reflect our view of the transaction's credit enhancement and legal structure and our expectation of timely interest and full principal payments, among other factors.
 
NEW YORK (S&P Global Ratings) March 13, 2019--S&P Global Ratings today 
assigned its ratings to Verizon Owner Trust 2019-A's wireless device payment 
plan agreement-backed notes series 2019-A (see list).

The note issuance is an asset-backed securities (ABS) transaction backed by a 
revolving pool of wireless device payment plan agreement receivables.

The ratings reflect:
  • The transaction's initial revolving phase (up to two years), during which loan collections may be used to purchase additional receivables. The transaction structure includes credit enhancement tests, pool composition tests, and amortization triggers intended to limit deterioration in pool quality and credit enhancement during this period.
  • The availability, when the receivables pool meets the floor credit enhancement composition tests, of approximately 26.4%, 20.1%, and 16.1% credit support on average to the class A, B, and C notes, respectively, based on stressed break-even cash flow scenarios. These credit support levels provide coverage of approximately 7.0x, 5.3x, and 4.3x on average to the class A, B, and C notes, respectively, of our expected loss of 3.8%, assuming a worst-case pool mix. The floor credit enhancement composition tests are met when the receivables pool meets a higher credit quality threshold compared with the pool composition tests.
  • The availability, when the receivables pool meets the pool composition tests, of approximately 27.7%, 22.6%, and 18.7% credit support on average to the class A, B, and C notes, respectively, based on stressed break-even cash flow scenarios. These credit support levels provide coverage of approximately 6.6x, 5.4x, and 4.4x on average to the class A, B, and C notes, respectively, of our expected loss of 4.2% assuming a worst-case pool mix. The pool composition tests are met when the receivables pool meets a lesser credit quality threshold compared with the floor credit enhancement 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 '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, overcollateralization, a reserve account, and the yield supplement overcollateralization amount.
  • Our expectation of timely interest and full principal payments made under stressed cash flow modeling scenarios appropriate for the assigned ratings.
  • The eligibility criteria for the revolving pool being securitized.
  • The transaction's floor credit enhancement composition tests, pool composition tests, credit enhancement test, amortization events, and legal structure.