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Rating Action:

Moody's assigns provisional ratings to Ally Master Owner Trust 2014-1 Ally Bank sponsored dealer floorplan ABS

Global Credit Research - 27 Jan 2014

$500 million of asset-backed securities rated

New York, January 27, 2014 -- Moody's Investors Service has assigned provisional ratings to the Series 2014-1 notes (Notes) to be issued by Ally Master Owner Trust (AMOT 2014-1). The Notes are collateralized primarily by dealer floorplan loans extended by Ally Bank, a subsidiary of Ally Financial Inc., to franchised new car dealers primarily associated with General Motors and Chrysler brands.

The complete rating actions are as follows:

Issuer: Ally Master Owner Trust, Series 2014-1

Cl. A-1, Assigned (P)Aaa (sf)

Cl. A-2, Assigned (P)Aaa (sf)

RATINGS RATIONALE

Moody's said the ratings are based on an assessment of the quality of the underlying auto dealer floorplan receivables, the legal structure and structural provisions, the manufacturers which the transaction is primarily exposed to (General Motors and Chrysler), the experience of Ally Financial Inc. as servicer, and the experience of Wells Fargo Bank, National Association as back-up servicer.

The quality of the floorplan receivables was considered based upon a number of characteristics. A primary consideration is the strength of the manufacturers and the vehicles that the dealerships and the receivables have exposure. Moody's also considered the size of the dealership base that is part of Ally Master Owner Trust, the dealer credit rating distribution according to Ally Bank's proprietary dealer credit evaluation system, the age distribution of the receivables, and the overall trust monthly payment rate. Vehicle values under stressed scenarios were also a consideration in our analysis. Moody's Aaa Level for AMOT 2014-1 is 25%.

The AMOT 2014-1 Class A-1 Notes will have a coupon that is based on a floating rate. The coupon on the Class A-1 Notes hose notes will be unhedged, and bear interest at a floating rate corresponding to 1-month LIBOR.

The principal methodology used in this rating was "Moody's Approach to Rating U.S. Floorplan ABS Securities" published in January 2010. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

FACTORS THAT WOULD LEAD TO A DOWNGRADE OF THE RATING

Levels of credit protection that are insufficient to protect investors against current expectations of loss could drive the ratings down. Losses could rise above Moody's original expectations as a result of a higher number of dealer defaults or deterioration in the value of the vehicles securing a dealer's promise of payment. Additionally, a weakening credit profile of auto manufacturers and dealers could increase expectations for loss. Transaction performance also depends greatly on US economic performance. Other reasons for worse-than-expected performance include poor servicing, error on the part of transaction parties, inadequate transaction governance and fraud.

STRESS SCENARIOS

As the Loss and Cash Flow Analysis section in the "Regulatory Disclosures" section describes below, in our simulation analysis we assumed that General Motors was rated Ba3, three notches below its most recent corporate family rating of Baa3 which was upgraded and withdrawn on September 23, 2013. We further assumed that Chrysler experienced a liquidation bankruptcy scenario. Chrysler is currently rated B1. The simulation analysis incorporated a stressed average dealer default rate of 50%. Our primary assumptions for recovery rates of repossessed cars from defaulted dealers was 72% for new cars and 67% for used cars.

Additional research including a pre-sale report for this transaction is available at www.moodys.com.

REGULATORY DISCLOSURES

For further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions of the disclosure form.

Moody's did not receive or take into account a third-party assessment on the due diligence performed regarding the underlying assets or financial instruments in this transaction.

Further information on the representations and warranties and enforcement mechanisms available to investors are available on http://www.moodys.com/viewresearchdoc.aspx?docid=PBS_SF355195

The analysis relies on a Monte Carlo simulation that generates a large number of collateral loss or cash flow scenarios, which on average meet key metrics Moody's determines based on its assessment of the collateral characteristics. Moody's then evaluates each simulated scenario using model that replicates the relevant structural features and payment allocation rules of the transaction, to derive losses or payments for each rated instrument. The average loss a rated instrument incurs in all of the simulated collateral loss or cash flow scenarios, which Moody's weights based on its assumptions about the likelihood of events in such scenarios actually occurring, results in the expected loss of the rated instrument.

Moody's describes the stress scenarios it has considered for this rating action in the section "Rating Rationale" of this press release.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Jeffrey R Hibbs
Asst Vice President - Analyst
Structured Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

J McGinnis Caldwell
Senior Vice President/Manager
Structured Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's assigns provisional ratings to Ally Master Owner Trust 2014-1 Ally Bank sponsored dealer floorplan ABS
No Related Data.

 

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