Fitch assigns CNH Equipment Trust 2007-A the following ratings:
--$228,000,000 class A-1 notes 'F1+';
--$311,000,000 class A-2 notes 'AAA';
--$270,000,000 class A-3 notes 'AAA';
--$358,000,000 class A-4 notes 'AAA';
--$33,000,000 class B notes 'A'.
The notes are backed by retail installment sales contracts and leases on new and used agricultural and construction equipment originated by CNH Capital America, LLC (CNH Capital), which is a wholly owned subsidiary of CNH Global N.V. The 2007-A transaction is the 16th U.S. public securitization issued by CNH Capital LLC that includes receivables originated by CNH Capital. New Holland Credit is the servicer of the 2007-A transaction.
The ratings are based on credit enhancement (CE) provided by subordination (2.75% class B notes) and a cash reserve account funded upon closing at 2.50% of the initial receivables balance and excess spread.
In deriving CE levels, Fitch analyzed annual performance data and static performance data of prior CNH Capital securitizations and various concentrations in the underlying pool. Fitch took into consideration the current nature of the agricultural industry and the cyclicality of the construction industry to assess the impact of an economic downturn on the frequency of repossessions and on recovery rates (and timing lags) on repossessed equipment. Fitch's analysis also factored in the strength of the CNH Capital and New Holland Credit dealership networks, which greatly aid in the collection, repossession, and remarketing processes.
The initial $953 million collateral pool consists of installment sales contracts on agricultural (71.25%) and construction (28.75%) equipment, which is new (59.61%) and used (40.39%). The initial pool has approximately three months of weighted average seasoning and is diversified geographically, with the largest state concentrations in Illinois (8.02%), Iowa (7.74%), Texas (7.17%), Minnesota (5.78%), and Indiana (4.10%). No other state accounts for more than 3.75% of the pool.
Geographic diversification acts to insulate the transaction against regional economic downturns. Upon closing, approximately $286 million of the proceeds from the sale of the notes will be deposited into a trust account and will be used from time to time (subject to certain eligibility criteria) to purchase additional receivables for addition to the trust pool. After the prefunding period, no more than 35% of the contract value can consist of contracts on construction equipment.
Interest and principal payments are to be made monthly. Interest will be paid pro-rata to each class of notes, and principal collections will be allocated sequentially between the class A and B notes. All principal collections first will be used to pay down the class A-1 notes until their outstanding balance is zero. The class A allocation will be used to pay down the notes sequentially within the class A.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
