Approximately $166 million of asset-backed securities affected
New York, March 29, 2011 -- Moody's Investors Service has upgraded eight subordinate tranches from
six auto loan transactions issued in 2007 and 2008 by CarMax Business
Services LLC ("CarMax"). These rating actions were build-up
in credit enhancement supporting each of the securities subject to this
action under the sequential-pay structures.
RATINGS:
Issuer: CarMax Auto Owner Trust 2007-1
Cl. C, Upgraded to Aaa (sf); previously on Feb 15,
2011 A2 (sf) Placed Under Review for Possible Upgrade
Issuer: Carmax Auto Owner Trust 2007-2
Cl. C, Upgraded to Aaa (sf); previously on Feb 15,
2011 Baa1 (sf) Placed Under Review for Possible Upgrade
Issuer: Carmax Auto Owner Trust 2007-3
Cl. B, Upgraded to Aaa (sf); previously on Feb 15,
2011 Aa1 (sf) Placed Under Review for Possible Upgrade
Cl. C, Upgraded to Aa2 (sf); previously on Feb 15,
2011 Baa3 (sf) Placed Under Review for Possible Upgrade
Issuer: CarMax Auto Owner Trust 2008-1
Cl. B, Upgraded to Aaa (sf); previously on Feb 15,
2011 Aa1 (sf) Placed Under Review for Possible Upgrade
Cl. C, Upgraded to A1 (sf); previously on Feb 15,
2011 Baa3 (sf) Placed Under Review for Possible Upgrade
Issuer: CarMax Auto Owner Trust 2008-2
Cl. C, Upgraded to Aaa (sf); previously on Feb 15,
2011 Aa3 (sf) Placed Under Review for Possible Upgrade
Issuer: Carmax Auto Owner Trust 2008-A
Cl. B, Upgraded to Aaa (sf); previously on Feb 15,
2011 Aa1 (sf) Placed Under Review for Possible Upgrade
RATINGS RATIONALE
The rating actions are primarily a result of build up in credit enhancement
relative to remaining losses due to the non-declining reserve accounts
and sequential payment structure of the transactions.
Moody's expects CarMax Auto Owner Trust 2007-1, 2007-2
and 2007-3 transactions to incur lifetime cumulative net losses
(CNL) of 4.10% which is toward the middle of the previous
range of 4.00% to 4.25% when the securities
were placed on review in February. Total hard credit enhancement
(that excludes excess spread) for Cl. B upgraded tranche is approximately
18% of outstanding collateral balance. Total hard credit
enhancement (that excludes excess spread) for Cl. C upgraded tranches
are approximately 10%, 7% and 6%, respectively,
of the outstanding collateral balance. Excess spread for the transactions
range between 4.3% and 5.0% per annum,
of outstanding collateral balance. Pool factors for the transactions
are 10%, 14% and 18%, respectively,
of the outstanding collateral balance. Moody's Aaa level for the
transactions is approximately 9%, 9% and 10%,
respectively, of the remaining collateral balance. The Aaa
level is the level of credit enhancement that would be consistent with
a Aaa rating for the given asset pool.
Moody's expects CarMax Auto Owner Trust 2008-1 transaction to incur
CNL of 4.30% which is at the low end of the previous range
of 4.25% to 4.75% when the securities were
placed on review in February. Total hard credit enhancement (that
excludes excess spread of approximately 4.2% per annum)
for Cl. B and Cl. C upgraded tranches is approximately 14%
and 4%, respectively, of the outstanding collateral
balance. Pool factor for the transaction is 24% of the outstanding
collateral balance. Moody's Aaa level for the transaction is approximately
11% of the remaining collateral balance
Moody's expects CarMax Auto Owner Trust 2008-A transaction to incur
lifetime CNL of 3.90% which is at the high end of the previous
range of 3.50% to 4.00% when the security
was placed on review in February. Total hard credit enhancement
(that excludes excess spread of approximately 2.3% per annum)
for Cl. B upgraded tranche is approximately 18% of outstanding
collateral balance. Pool factor for the transaction is 27%
of the outstanding collateral balance. Moody's Aaa level for the
transaction is approximately 11% of the remaining collateral balance.
Moody's expects CarMax Auto Owner Trust 2008-2 transaction to incur
lifetime CNL of 3.75% which is at the high end of the previous
range of 3.25% to 3.75% when the security
was placed on review in February. Total hard credit enhancement
(that excludes excess spread of approximately 3.0% per annum)
for Cl. C upgraded tranche is approximately 13% of outstanding
collateral balance. Pool factor for the transaction is approximately
33% of the outstanding collateral balance. Moody's Aaa level
for the transaction is approximately 12% of the remaining collateral
balance.
Ratings on the affected notes could be upgraded (where applicable) if
the lifetime CNLs are lower by 10%, or downgraded if the
lifetime CNLs are higher by 10%.
The performance expectations for a given variable indicate Moody's forward-looking
view of the likely range of performance over the medium term. From
time to time, Moody's may, if warranted, change these
expectations. Performance that falls outside the given range may
indicate that the collateral's credit quality is stronger or weaker than
Moody's had anticipated when the related securities ratings were issued.
Even so, a deviation from the expected range will not necessarily
result in a rating action nor does performance within expectations preclude
such actions. The decision to take (or not take) a rating action
is dependent on an assessment of a range of factors including, but
not exclusively, the performance metrics. Primary sources
of assumption uncertainty are the current macroeconomic environment,
in which unemployment continues to rise, and weakness in the used
vehicle market. Moody's currently views the used vehicle market
as stronger now than it was a year ago, when the uncertainty relating
to the economy as well as the future of the U.S auto manufacturers
was significantly greater. Overall, Moody's central global
scenario remains "Hook-shaped" for 2010 and 2011; we expect
overall a sluggish recovery in most of the world largest economies,
returning to trend growth rate with elevated fiscal deficits and persistent
unemployment levels.
The principal methodology used in these rating actions was "Moody's Approach
to Rating U.S. Auto Loan-Backed Securities",
published in June 2007 and available on www.moodys.com in
the Rating Methodologies sub-directory under the Research &
Ratings tab. Other methodologies and factors that may have been
considered in the process of rating these transactions can also be found
in the Rating Methodologies sub-directory on Moody's website.
Further information on Moody's analysis of this transaction is available
on www.moodys.com.
Moody's Investors Service did not receive or take into account a third
party due diligence report on the underlying assets or financial instruments
related to the monitoring of this transaction in the past 6 months.
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 maintaining
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.
San Francisco
Eric Fellows
VP - Senior Credit Officer
Structured Finance Group
Moody's FIS Domestic Sales Office - San Francisco CA
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Alda F. Sanchez
Associate Analyst
Structured Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Investors Service
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New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's upgrades CarMax 2007 and 2008 prime auto loan ABS