Fitch Ratings has taken the following rating actions on Distribution Financial Services RV/Marine Trust 2001-1 (2001-1):
--Class A-5 affirmed at 'AAA';
--Class B affirmed at 'AA';
--Class C affirmed at 'A';
--Class D downgraded to 'B-' from 'BBB'; remains on Rating Watch Negative.
The classes A-1, A-2, A-3, and A-4 notes have paid in full, while the classes A-5, B, C, and D notes remain outstanding. The rating action reflects recent deterioration in performance of the 2001-1 transaction resulting in cash reserve draws.
As of month 82 (the November collection period), total delinquencies stood at 4.89%, a 2.41% increase over 2.48% total delinquencies as of month 77 (June collection period). Cumulative net losses (CNL) reached 3.8%, a 0.16% increase from 3.64% for the same periods, respectively. The transaction experienced six month consecutive draws from the cash reserve account, resulting in the cash reserve account balance of $786,601, a 43% decline from $1,368,728.75 as of the June collection period.
Fitch has noted that the performance in both delinquency and CNL have exhibited weaker trends in recent months. In addition, the transaction experiences declines in both recovery rates and prepayment speeds, resulting in weakening loss coverage for all classes of notes. The loss coverage decline is most significant for the class D notes, which does not benefit from subordination. The cash reserve account provides the only credit enhancement for the class D notes, and the recent cash reserve account draws have had a profound impact on this class of notes.
Fitch analyzed the transaction incorporating stresses of the revised base-case CNL assumptions, the timing of the remaining losses and various prepayment assumptions. The low recoveries and prepayment speeds, the high defaults, delinquency and increases in CNL along with rapid draws on cash reserve account resulted in diminished loss coverage for class D notes, warranting the downgrade. In addition, the class D notes remain on Rating Watch Negative due to the continued negative trends in the collateral performance.
Fitch affirms all senior classes of notes due to adequate credit enhancement provided by subordination of the lower classes and the cash reserve account. Fitch will continue to closely monitor the performance of this transaction over the next three to six months and will take rating action within that time period to resolve the Rating Watch Negative status.
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