$717.3 million of asset-backed securities rated.
New York, January 31, 2011 -- Moody's has assigned provisional ratings to the GE Equipment Small
Ticket LLC, Series 2011-1 transaction, a securitization
of small ticket equipment leases sponsored by General Electric Capital
Corporation (GECC, Aa2). The complete rating action is as
follows:
Issuer: GE Equipment Small Ticket LLC, Series 2011-1
Cl. A-1, Assigned (P)P-1 (sf)
Cl. A-2, Assigned (P)Aaa (sf)
Cl. A-3, Assigned (P)Aaa (sf)
Cl. B, Assigned (P)Aa2 (sf)
Cl. C, Assigned (P)A1 (sf)
Cl. D, Assigned (P)Baa1 (sf)
RATINGS RATIONALE
The ratings are based primarily on an analysis of the credit quality of
the collateral, the collateral's historical performance including
residual realization experience, the servicing ability of GECC,
and the level of credit enhancement available under the proposed capital
structure. Collateral for the transaction, originated and
serviced by GECC, consists mostly of true leases generally extended
to small business obligors and secured by various types of equipment including
office equipment (85.52%), technology and telecommunications
equipment (8.01%), and industrial equipment (2.76%)
There is a moderate amount of exposure to end-of-lease equipment
value in this transaction since the collateral value advanced against
includes a consideration for the residual value assigned to the equipment
under the lease contract (book value of the residual accounts for 11.41%
of initial securitized value by dollars).
Moody's median cumulative net loss expectation for the collateral pool
securitized in GEEST 2011-1 is 2.45%. The
net loss expectation is comprised of a credit loss component and a residual
value loss component. The net loss expectation is based primarily
on an analysis of the collateral's historical performance --
including securitization performance, static pool performance for
quarterly originations and managed portfolio performance -- adjusted
to reflect differences between the economic conditions underlying the
historical performance and our expectation of future economic conditions.
Moody's Aaa volatility proxy for the deal is 18.40%.
Moody's V Score. The V Score for this transaction is Low/Medium,
which is in line with the score assigned to the U.S. Large
Issuer Equipment Lease and Loan ABS sector. The V Score indicates
"Low/Medium" uncertainty about critical assumptions. Moody's V
Scores provide a relative assessment of the quality of available credit
information and the potential variability around the various inputs to
a rating determination. The V Score ranks transactions by the potential
for significant rating changes owing to uncertainty around the assumptions
due to data quality, historical performance, the level of
disclosure, transaction complexity, the modeling and the transaction
governance that underlie the ratings. V Scores apply to the entire
transaction (rather than individual tranches).
Moody's Parameter Sensitivities. If the expected cumulative net
loss used in determining the initial rating were changed to 3.70%,
5.90%, or 7.75%, the initial model-indicated
rating for the Class A notes might change from Aaa to Aa1, Aa3,
and A2, respectively. If the expected cumulative net loss
used in determining the initial rating were changed to 2.95%,
4.05%, or 4.95%, the initial model-indicated
rating for the Class B notes might change from Aa2 to Aa3, A2,
and Baa1, respectively. If the expected cumulative net loss
used in determining the initial rating were changed to 3.05%,
3.80%, or 4.65%, the initial model-indicated
rating for the Class C notes might change from A1 to A2, Baa1,
and Baa3, respectively. If the expected cumulative net loss
used in determining the initial rating were changed to 2.65%,
3.50%, or 4.45%, the initial model-indicated
rating for the Class D notes might change from Baa11 to Baa2, Ba1,
and Ba3, respectively.
Parameter Sensitivities are not intended to measure how the rating of
the security might migrate over time, rather they are designed to
provide a quantitative calculation of how the initial rating might change
if key input parameters used in the initial rating process differed.
The analysis assumes that the deal has not aged. Parameter Sensitivities
only reflect the ratings impact of each scenario from a quantitative/model-indicated
standpoint. Qualitative factors are also taken into consideration
in the ratings process, so the actual ratings that would be assigned
in each case could vary from the information presented in the Parameter
Sensitivity analysis.
Moody's Investors Service did not receive or take into account a
third party due diligence report on the underlying assets or financial
instrument in this transaction.
PRINCIPAL METHODOLOGY
The principal methodology used in rating the transaction was "Moody's
Approach to Rating Securities Backed by Equipment Leases and Loans,"
published April 2007. Other methodologies and factors that may
have been considered in the process of rating this issue can also be found
in the Rating Methodologies sub-directory on Moody's website.
Additional research including a pre-sale report for this transaction
is available at www.moodys.com. The special reports,
"Updated Report on V Scores and Parameter Sensitivities for Structured
Finance Securities" and "V Scores and Parameter Sensitivities in the U.S.
Equipment Lease and Loan ABS Sector" are also available on moodys.com.
REGULATORY DISCLOSURES
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of assigning
a credit rating.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
New York
Michael McDermitt
VP - Senior Credit Officer
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Michael Labuskes
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Investors Service
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's assigns provisional ratings to GE Equipment Small Ticket LLC, Series 2011-1
