Fitch IBCA Expects To Rate $850 Million Premier 1998-2 ABS - Fitch IBCA Financial Wire -
26 March 1998
Fitch IBCA Expects To Rate $850 Million Premier 1998-2 ABS - Fitch IBCA Financial Wire -
NEW YORK, March 26 -- Premier Auto Trust's 1998-2
$330 million 5.76% class A-2, $250 million 5.77% class A-3 and $230.6 million
5.82% class A-4 asset-backed notes are expected to be rated 'AAA' by Fitch
IBCA. The class A-1 notes will not be offered publicly. The $39.4 million
6.06% 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, the initial
overcollateralization amount (Initial O/C) and the availability of excess
spread to create additional overcollateralization. The expected rating on the
class B notes is based upon the reserve account, the Initial O/C and the
future build up of overcollateralization through the use of available excess
spread. Both expected ratings reflect the high quality of the retail auto
receivables originated by Chrysler Financial Corp. (CFC) and the sound legal
structure. The transaction will be fully funded at closing.
From a structural perspective, Premier 1998-2 differentiates itself from
the 1998-1 transaction in its cash flow allocation. Class B interest will not
be subordinated to class A principal payments as it was in the 1998-1
transaction. Similar to the 1998-1 and 1997-3 transactions, it contains a
cash release mechanism whereby 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 9.25%, will grow through
overcollateralization created through the application of excess spread. The
Initial O/C (4.5%) will increase to a target of approximately 6.5% of the
outstanding note principal balance, whereupon the CRP will begin. 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
original O/C amount, 4.5% of the initial note principal balance (INPB),
provided that all due principal and interest payments have been paid, the O/C
is at least 5.0% of the current notional balance, the reserve account is fully
funded and the class A-1 notes have been paid in full. Beginning on or after
the last distribution date of the CRP, when the O/C amount reaches a level of
7.75% of the current notional balance, the 1.0% reserve account will decrease
to 0.75% of the INPB. Credit enhancement for the class B notes, initially
5.5% of the INPB, will increase in accordance to the above mentioned
structure.
As seen in the Premier Auto transactions since 1994, Premier 1998-2 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-4 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 IBCA