NEW YORK, NY – May 17, 2013 – (Motor Sports Newswire) – As part of its ongoing surveillance process, Fitch Ratings takes the following rating actions on the Harley-Davidson Motorcycle Trust 2011-2:
–Class A-2 notes affirmed at ‘AAAsf’; Outlook Stable;
–Class A-3 notes affirmed at ‘AAAsf’; Outlook Stable;
–Class A-4 notes affirmed at ‘AAAsf’; Outlook Stable;
–Class B notes upgraded to ‘AAAsf’ from ‘AAsf’; Outlook to Stable from Positive;
–Class C notes upgraded to ‘AAsf’ from ‘Asf’; Outlook to Stable from Positive.
KEY RATING DRIVERS:
The rating upgrades to the class B and C notes are a result of low loss performance and strong loss coverage. The transaction has continued to perform within Fitch’s expectations with cumulative net losses currently at 1.04%. The affirmations on the class A-2, A-3, and A-4 notes reflect loss coverage levels consistent with the current ratings. In addition, under the credit enhancement structure, the securities are able to withstand stress scenarios consistent with the upgraded ratings and make full payments to investors in accordance with the terms of the documents.
The ratings reflect the quality of Harley-Davidson’s retail motorcycle loan originations, the strength of its servicing capabilities, and the sound financial and legal structure of the transaction.
Unanticipated increases in the frequency of defaults and loss severity could produce loss levels higher than the current projected base case loss proxy and impact available loss coverage and multiples levels for the transactions. Lower loss coverage could impact ratings and Rating Outlooks, depending on the extent of the decline in coverage.
In Fitch’s initial review of the transactions, the notes were found to have limited sensitivity to a 1.5x and 2.5x increase of Fitch’s base case loss expectation. To date, the transactions have exhibited strong performance with losses well within Fitch’s initial expectations with rising loss coverage and multiple levels. As such, continued performance consistent with recent performance for the transactions would most likely result in positive rating actions. Conversely, a material deterioration in performance would have to occur within the asset pools to have potential negative impact on the outstanding ratings.
Initial Key Rating Drivers and Rating Sensitivity are further detailed in Fitch’s Oct. 31, 2011 presale report, available by clicking on the link at the end of the press release.
Additional information is available at ‘www.fitchratings.com‘.
Applicable Criteria and Related research:
–’U.S. Auto Loan ABS Rating Criteria’ (April 10, 2013);
–’Global Structured Finance Rating Criteria’ (June 6, 2012);
–’Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions’ (April 17, 2012);
–’Harley-Davidson Motorcycle Trust 2011-2′(Oct. 31, 2011);
–’Harley-Davidson Motorcycle Trust 2011-2 –Appendix ‘(October 31, 2011).
Applicable Criteria and Related Research
Rating Criteria for U.S. Auto Loan ABS
Global Structured Finance Rating Criteria
Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions — Amended
Harley-Davidson Motorcycle Trust 2011-2 (US ABS)
Harley-Davidson Motorcycle Trust 2011-2 — Appendix