Approximately $185 million of asset-backed securities affected.
New York, April 05, 2012 -- Moody's has upgraded five and placed on review for possible upgrade three
subordinated notes issued by two GE midticket and two GE small ticket
equipment transactions. The midticket transactions are secured
by pools of loans and leases concentrated in transportation, construction,
and manufacturing equipment, and the small ticket transactions are
backed primarily by leases for telecommunication and office imaging equipment.
The complete rating actions are as follows
Issuer: GE Equipment Midticket LLC, Series 2009-1
Cl. B, Upgraded to Aaa (sf); previously on Jun 10,
2011 Upgraded to Aa1 (sf)
Cl. C, Upgraded to Aaa (sf); previously on Jun 10,
2011 Upgraded to A2 (sf)
Issuer: GE Equipment Midticket LLC, Series 2010-1
Cl. B, Upgraded to Aaa (sf); previously on Sep 30,
2010 Definitive Rating Assigned Aa2 (sf)
Cl. C, Upgraded to Aaa (sf); previously on Sep 30,
2010 Definitive Rating Assigned A2 (sf)
Issuer: GE Equipment Small Ticket LLC, Series 2009-1
Cl. C, Upgraded to Aaa (sf); previously on Jun 10,
2011 Upgraded to A1 (sf)
Issuer: GE Equipment Small Ticket LLC, Series 2011-1
Cl. B, Aa2 (sf) Placed Under Review for Possible Upgrade;
previously on Feb 24, 2011 Definitive Rating Assigned Aa2 (sf)
Cl. C, A1 (sf) Placed Under Review for Possible Upgrade;
previously on Feb 24, 2011 Definitive Rating Assigned A1 (sf)
Cl. D, Baa1 (sf) Placed Under Review for Possible Upgrade;
previously on Feb 24, 2011 Definitive Rating Assigned Baa1 (sf)
RATINGS RATIONALE
The rating actions were prompted by strong credit and residual value performance
of the underlying contracts, and accretion of credit enhancement
due to the non-declining reserve account and overcollateralization.
Credit support for the notes includes reserve accounts, subordination,
overcollateralization, and excess spread. Other structural
enhancements include a feature requiring 50% of the excess cash
to be used to pay principal payments on the notes. This feature
speeds up amortization of the notes and contributes to the build-up
of overcollateralization.
The GE Small Ticket 2009-1 and 2011-1 transactions are exposed
to residual value risk for any equipment that is returned to the lessor
at the maturity of the leases rather than purchased at the fair market
value, since this equipment then has to be remarketed and the resulting
sales proceeds may or may not cover the equipment's residual value.
As of the February distribution date, residual values comprised
approximately 34% and 16% of the outstanding pool balances
of the 2009-1 and 2011-1 transactions, respectively.
Residual value performance is gauged by comparing the sales proceeds of
equipment to its residual value at closing. Should the sale proceeds
generate more than the original residual value then the trust realizes
a gain, and if sales proceeds are lower than the original residual
value, the trust has a loss on that equipment. To date,
cumulative residual performance has been a gain of 2.25%
for the 2009-1 transaction, and a cumulative residual value
loss of approximately 2.0% for the 2011-1 transaction.
For each of the three upgraded transactions, our updated expected
lifetime net loss is lower than our original expectation. Below
are Moody's revised key performance metrics and credit assumptions
for each affected transaction, including expected lifetime net loss
(expressed as a percentage of original pool balance), expected remaining
net loss (expressed as a percentage of remaining pool balance),
and updated Aaa level (expressed as a percentage of the current pool balance).
The Aaa level is the level of credit enhancement that would be consistent
with a Aaa (sf) rating for the given asset pool. For the Small
Ticket 2009-1 transaction, our Aaa level incorporates the
level of obligor credit risk and residual value risk that is consistent
with a Aaa (sf) rating.
Issuer: GE Equipment Midticket LLC, Series 2009-1
Lifetime net loss expectation -- 1.5%
Remaining net loss expectation -- 2.5%
Aaa level -- Approximately 12.5%
Issuer: GE Equipment Midticket LLC, Series 2010-1
Lifetime net loss expectation -- 1.0%
Remaining net loss expectation -- 1.5%
Aaa level -- Approximately 8.0%
Issuer: GE Equipment Small Ticket LLC, Series 2009-1
Lifetime net loss expectation -- 2.0%
Remaining net loss expectation -- 2.1%
Aaa level -- Approximately 30%
The primary source of uncertainty in the performance of these transactions
is the current macroeconomic environment as it relates to the transportation,
mining, construction, manufacturing, telecommunication,
healthcare and services industries, which are the largest concentrations
in these transactions.
The principal methodology used in these ratings was "Moody's Approach
to Rating Securities Backed by Equipment Leases and Loans," published
March 2007. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
The Global Scale Credit Ratings on this press release that are issued
by one of Moody's affiliates outside the EU are endorsed by Moody's
Investors Service Ltd., One Canada Square, Canary Wharf,
London E 14 5FA, UK, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant 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 relevant 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 relevant 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.
Information sources used to prepare each of the ratings are the following:
parties involved in the ratings, parties not involved in the ratings,
and confidential and propriety Moody's Investors Service information.
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 related to the monitoring of these transactions
in the past six months.
Moody's considers the quality of information available on the rated
entities, obligations or credits satisfactory for the purposes of
issuing these ratings.
Moody's adopts all necessary measures so that the information it
uses in assigning the ratings 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.
In addition to the information provided below please find on the ratings
tab of the issuer page at www.moodys.com, for each
of the ratings covered, Moody's disclosures on the lead rating analyst
and the Moody's legal entity that has issued each of the ratings.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%) and
for (B) further information regarding certain affiliations that may exist
between directors of MCO and rated entities as well as (C) the names of
entities that hold ratings from MIS that have also publicly reported to
the SEC an ownership interest in MCO of more than 5%. A
member of the board of directors of this rated entity may also be a member
of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating Process
page on www.moodys.com for further information on the meaning
of each rating category and the definition of default and recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history.
The date on which some ratings were first released goes back to a time
before Moody's ratings were fully digitized and accurate data may not
be available. Consequently, Moody's 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 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.
Jason Grohotolski
Vice President - Senior 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
Amelia (Amy) Tobey
VP - Senior Credit Officer
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 takes positive actions on GECC sponsored equipment ABS transactions
