$1.68B Premier 1999-1 Asset-Backed Notes Rated AAA by Fitch IBCA
19 March 1999
$1.68B Premier 1999-1 Asset-Backed Notes Rated AAA by Fitch IBCA - Fitch IBCA -
NEW YORK, March 19 -- Premier Auto Trust's 1999-1
$520 million 5.51% class A-2, $510 million 5.69% class A-3, and
$329.367 million 5.82% class A-4 asset-backed notes are rated 'AAA' by Fitch
IBCA. The $325 million 4.995% class A-1 notes, rated 'F1+', and the unrated
$65.625 million certificates are not being publicly offered.
The 'AAA' rating on the class A notes is based on funds in the reserve
account, the subordination of the certificates, initial overcollateralization
(OC) amount, and excess spread used to turbo bonds creating additional OC. In
addition, the ratings reflect the high quality of the retail auto receivables
originated by Chrysler Financial Co., L.L.C. (CFC) and the sound legal and
cash flow structures. The transaction will be fully funded at closing.
Interest and principal on the class A notes will be distributed monthly,
beginning April 8, 1999. Classes A-1 through A-4 are sequential pay note
classes. No principal will be distributed to the certificateholders until all
the class A notes have been paid in full.
Credit enhancement for the class A notes, initially 8.00%, grows as
OC builds through the use of excess spread. The initial OC, 4.00% of the
initial securities principal balance, is expected to increase to 4.50% of the
current pool balance. Minimum target credit enhancement levels for the
Premier 1999-1 (8.50%) transaction are lower than those seen in the Premier
1998-5 transaction (9.00%). However, initial credit enhancement levels are
higher, 8.00% compared to 7.00% in the 1998-5 transaction, and more in line
with the 1998-4 transaction's initial credit enhancement of 8.25%. The
performance of Chrysler's retail auto portfolio and more recent
securitizations continues to be strong. The increase in the initial credit
enhancement level is a result of the decrease in the percentage of the number
of receivables generated under Chrysler's Gold Key Plus Program. Such
receivables, as described below, have the effect of lowering the overall net
loss assumption used when determining appropriate credit enhancement levels.
Fitch IBCA remains comfortable that credit enhancement available is
sufficient to sustain losses at its 'AAA' stress scenarios. Similar to the
Premier 1998-4 and 1998-5 transactions, the certificates do not bear interest.
By subordinating the certificates and eliminating certificate interest, the
structure assures that all collections on the receivables first go to pay
interest and principal to the senior bonds. Excess spread available to turbo
the class A notes is also increased under this structure.
Chrysler's Gold Key Plus Program constitutes approximately 6.2% of the
pool. Similar to a lease, contracts originated under this program provide for
a stream of fixed monthly payments with a final fixed payment at the end of
the contract term. At the end of the contract's term, the obligor has the
option of 1) returning the vehicle to Chrysler; 2) purchasing the vehicle by
payment in full of the vehicle's final fixed payment; or 3) refinancing the
final fixed payment.
The final payment for a Gold Key Plus program receivable is equal to the
residual value of the vehicle which is set at origination of the contract.
The trust will receive only the fixed monthly payments pertaining to the
vehicle contracts originated under this program; the final payment is not
securitized. However, in the event of an obligor default, all proceeds from
the sale of the vehicle backing the receivable will first go to pay off the
principal balance of the fixed monthly payments due to the trust plus any
interest accrued up to the date of default. As the balance of the fixed
monthly payments is paid down, the residual value as a percentage of the
outstanding loan balance grows, effectively creating OC in the loan and
reducing loss exposure should the vehicle be repossessed and sold.
The total pool of receivables will consist of new and used automobile and
light-duty truck installment loans and have a weighted average annual
percentage rate (APR) of 9.11%, slightly higher than the 9.09% weighted
average APR of the recent 1998-5 Premier transaction. The receivables have a
weighted average remaining term of 56.69 months compared to 48.88 months in
the 1998-5 transaction and 55.60 months in the 1998-4 transaction. Used
vehicles have increased to 21.6% from 19.4% on the previous deal, but remain
lower than the 24.28% seen in 1998-4. Approximately 86% of the vehicles
represent financing of automobiles manufactured or distributed by Chrysler
Corp., relatively unchanged from the last transaction.