Fitch Ratings Lanka has affirmed Peoples Leasing Co. Ltd. Trust 32’s (PLC32) remaining LKR30.1m lease-backed trust certificates (LBTCs) at ‘A-(lka)’. The Outlook remains Stable. The Loss Severity rating remains at ‘LS-3’. The transaction is a securitisation of vehicle leases which were mortgaged to the trust.
The affirmation reflects the transaction’s ultimate recourse to the originator of the trust, Peoples Leasing Company (‘A-(lka)’/Stable), strong performance of the transaction, high levels of excess collateral (pool principal in excess of note principal as a percentage of note principal) and relatively strong quality of the collateral owing to the periodic replacement of overdue assets to date. However, the rating remains constrained by the possible delay in enforcing the mortgage in the event the originator is liquidated, the lack of a liquidity reserve to meet note holder payments in this event, and the absence of a specified alternative service provider.
Debt service cover averaged 1.9x in the review period (May 2009 to May 2010), which is higher than the expected level at inception. Replacements have resulted in excess collateral amounting to 382% and performing loans (loans less than three months in arrears) amounting to 98% of the collateral pool as at May 2010. As a result, Fitch expects the strong performance of the transaction to continue till all the notes are expected to be fully repaid at legal final maturity in March 2011.
Rating Outlooks have been published for all newly issued Asia Pacific Structured Finance tranches since June 2008, and concurrently with rating actions for tranches issued prior to June 2008. Unlike a Rating Watch which notifies investors that there is a reasonable probability of a rating change in the short term as a result of a specific event, rating outlooks indicate the likely direction of any rating change over a one-to two-year period.