World Omni Auto Lease Trust $1.1B Nts Expd AAA by Fitch IBCA
26 August 1999
World Omni Auto Lease Trust $1.1B Nts Expd AAA by Fitch IBCA
NEW YORK--Aug. 25, 1999--World Omni 1999-A Automobile Lease Securitization Trust's $330,000,000 floating rate class A-1, $310,000,000 floating rate class A-2, $249,000,000 floating rate class A-3, and $184,472,000 floating rate class A-4 automobile lease asset-backed notes are expected to be rated `AAA' by Fitch IBCA.The $60,927,000 floating rate class B automobile lease asset-backed notes were not publicly offered. No principal is payable on the securities until the end of the revolving period, which will be the earlier of Sept. 1, 2000, or the occurrence of an early amortization event. Principal and interest is distributed on the 15th of each month; interest commencing on Oct. 15, 1999, with principal payments following the termination of the revolving period.
The securities are backed by retail closed-end automobile and light truck lease contracts. The expected class A ratings are based on the quality of the trust assets, available credit enhancement, residual value insurance policy provided by American International Specialty Lines Insurance Co. (AISLIC), the terms of the interest rate cap and the financial strength of the cap counterparty (Credit Lyonnais New York Branch).
The expected ratings also reflect World Omni Financial Corp.'s (WOFCO) strong underwriting and servicing capabilities, and the integrity of the cash flow and legal structures. Credit enhancement on the aggregate $1.073 billion class A notes totals 8.5% and consists of the 5.25% class B notes, the 2.25% transferor interest, and the 1% reserve fund. Excess spread is also available for credit support.
The reserve fund is funded at closing with a cash deposit of 1% of the aggregate net investment value, or the discounted balance of all contracts excepting charged-off, liquidated, matured and certain other contracts, plus the aggregate residual values of all outstanding contracts. The transferor interest equals 2.25% of the trust, and as the equity interest in the trust, is subordinated to all other required payments on each distribution date.
The residual value insurance policy provided by AISLIC, an indirect subsidiary of American International Group Inc., is available to cover the insured residual value loss amount, up to $60,000 per vehicle, for matured contracts in any collection period. However, under the 1999-A residual value insurance policy the aggregate maximum amount payable equals 20% of the aggregate insured residual values of all leased vehicles as of the cutoff date, unlike previous transactions where the policy was available to cover 100% of all residual value losses.
Fitch IBCA models various scenarios that stress collateral pool performance variables, including delinquency interest, prepayment speeds, recovery rates, loss speed vectors and base case credit loss estimates to determine required credit enhancement levels for the notes.
In addition, since this transaction does not have the benefit of 100% residual value insurance, end of lease vehicle turn-in rates and residual value loss assumptions were also estimated and stressed in determining credit enhancement requirements. With the current levels of enhancement, the class A notes can withstand credit and residual value losses consistent with Fitch IBCA's `AAA' stresses.
World Omni Financial Corp. is a Florida corporation that is a wholly owned subsidiary of JM Family Enterprises Inc. (JMFE). JMFE also wholly owns Southeast Toyota Distributors Inc., which is the exclusive distributor of Toyota automobiles and light duty trucks in Florida, Alabama, Georgia, North Carolina and South Carolina. WOFCO provides consumer lease and installment contract financing to retail customers of, and floorplan and dealer financing to, dealers located throughout the United States.