Fitch Expects to Rate $1.2 Billion Premier 1997-3 Asset Backed Notes
11 September 1997
Fitch Expects to Rate $1.2 Billion Premier 1997-3 Asset Backed Notes
NEW YORK, Sept. 11 -- Premier Auto Trust's 1997-3
$225 million 5.96% class A-2, $240 million 6.12% class A-3, $175 million
6.20% class A-4 and $290 million 6.34% class A-5 asset backed notes are
expected to be rated 'AAA' by Fitch. The class A-1 notes will not be offered
publicly and will be retained by Chrysler Financial Corp. (CFC). The
$45 million 6.52% subordinated class B notes are expected to be rated 'A+'.
The expected ratings on the class A notes are based upon funds in the reserve
account, the subordination of the class B notes and the availability of excess
spread to create overcollateralization. The expected rating on the class B
notes is based upon the reserve account, the initial overcollateralization
amount (initial O/C) and the future build up of overcollateralization through
the use of available excess spread. Both ratings reflect the high quality of
the retail auto receivables originated by CFC and the sound legal structure.
The transaction will be fully funded at closing.
From a structural perspective, credit enhancement for Premier 1997-3 is
substantially similar to the Premier 1997-1 and 1997-2 transactions. The
major difference lies in the application of the cash release mechanism -- cash
generated from payments on the underlying receivables, not the actual
receivables themselves as seen in the 1997-1 and 1997-2 transactions, will be
released during the cash release period (CRP). Credit enhancement for the
class A notes, initially 9.75%, will grow through overcollateralization
created through the application of excess spread. The initial O/C (5.0%) will
increase to a target of 7.75% of the outstanding note principal balance,
whereupon the 1.0% reserve account will decrease to 0.75% of the initial note
principal balance (INPB) and the overcollateralization amount (O/C) will
revert back to 5.50%. On each distribution date during the CRP, cash from the
underlying receivables will be released to Premier Receivables L.L.C. on a
cumulative basis up to the initial O/C amount (5.0% of the INPB), provided
that all due principal and interest payments have been paid, the O/C is at
least 5.50% of the current notional balance and the reserve account is fully
funded. Credit enhancement for the class B notes, initially 6.0% of the INPB,
will increase in accordance to the above mentioned structure.
Premier 1997-3 will utilize a full turbo structure feature to increase
overcollateralization. Since all excess spread will be distributed as
principal to the class A notes before and after the CRP, overcollateralization
increases over time, providing substantial loss protection for each class of
noteholders. In addition, the reserve account is based on the INPB, a feature
which also increases credit enhancement as the pool amortizes.
Principal and interest on the class A and B notes will be distributed
monthly. Classes A-1 through A-5 are sequential pay note classes. No
principal will be distributed to the class B noteholders until all the
class A notes have been paid in full.
SOURCE Fitch Investors Service