Fitch Ratings expects to assign the following ratings and Outlooks to the class A notes issued by MMAF Equipment Finance LLC 2012-A:
--$144,000,000 class A-1 notes 'F1+sf';
--$151,000,000 class A-2 notes 'AAAsf;' Outlook Stable;
--$180,000,000 class A-3 notes 'AAAsf'; Outlook Stable;
--$147,000,000 class A-4 notes 'AAAsf;' Outlook Stable;
--$83,400,000 class A-5 notes 'AAAsf'; Outlook Stable.
The presale report is available to all investors on Fitch's website at 'fitchratings.com'.
Key Rating Drivers:
Strong Credit Quality and Diversification: 2012-A is backed by mostly investment-grade obligors (72.29 percent of the pool with the U.S. government totaling 13.06 percent), comprises over 15 equipment types in over 20 industries, and is geographically diverse.
Consistent Portfolio Diversification: Obligor, industry, equipment type, and geographic concentrations in 2012-A are consistent with 2011-A. The top obligor totals 13.06 percent of the pool, slightly down from 13.75 percent in 2011-A. The top equipment type, transportation, increased marginally in 2012-A to 26.66 percent from 24.25 percent in 2011-A.
Strong Performance: MMAF's portfolio and securitizations have performed well, with virtually no delinquencies and 0 percent losses to date, along with a 0 percent turn-in rate and consistent residual realization rates over 100 percent, with all equipment sold to lessees to date.
Sufficient Enhancement: 2012-A has 11.00 percent total hard credit enhancement (CE) for the class A notes, 25 bps higher than 2011-A, and initial excess spread (XS) totals approximately 0.80 percent. CE is sufficient to support the loss coverage levels consistent with the expected ratings.
Quality Underwriting and Servicing Platform: MMAF mostly does not originate contracts but purchases them from approved syndicators. However, MMAF demonstrates adequate abilities as an underwriter and servicer, as evidenced by historical performance of their securitizations and managed portfolio. Portfolio Financing Services Company (PFSC) is the sub/backup servicer for 2012-A.
Strong Parent: Fitch rates Massachusetts Mutual Life Insurance Company (MassMutual), MMAF's parent, 'AA/F1+' with a Stable Rating Outlook. Babson Capital Management LLC (Babson) is the performance guarantor for 2012-A, and manages MMAF's operations actively.
Integrity of Legal Structure: The legal structure of the transaction provides that a bankruptcy of MMAF would not impair the timeliness of payments on the securities.
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