Fitch Expects to Rate MMAF Equipment Finance 2013-A; Presale Issued [Manufacturing Close – Up]

Proquest LLC

Fitch Ratings expects to assign the following ratings and Outlooks to the class A notes issued by MMAF Equipment Finance 2013- A:

--$152,000,000 class A-1 notes 'F1+sf';

--$165,000,000 class A-2 notes 'AAAsf;' Outlook Stable;

--$162,000,000 class A-3 notes 'AAAsf'; Outlook Stable;

--$167,000,000 class A-4 notes 'AAAsf;' Outlook Stable;

--$ 86,290,000 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: 2013-A is backed primarily by investment-grade obligors (75.35 percent by current balance), with the U.S. government being the largest (14.23 percent). The pool includes 15 equipment types in more than 25 industries and is geographically diverse.

Consistent Portfolio Diversification: Obligor, equipment type and industry concentrations in 2013-A are relatively consistent with 2012-A. The top equipment type (transportation) decreased to 24.01 percent from 26.66 percent in 2012-A. The largest obligor industry (healthcare) accounts for 17.92 percent of the pool, up from 13.06 percent (federal government) in 2012-A.

Strong Performance: MMAF's portfolio and securitizations have performed well, with virtually no delinquencies and minimal losses to date, along with a 0.0 percent turn-in rate and consistent residual realization rates over 100 percent, with all equipment sold to lessees to date.

Sufficient Enhancement: 2013-A has 10.25 percent total hard credit enhancement (CE) for the class A notes, 75 basis points (bps) lower than 2012-A. Initial excess spread (XS) totals approximately 0.82 percent, comparable to 0.80 percent in 2012-A. CE remains sufficient to support the loss coverage levels consistent with the expected ratings.

Quality Underwriting and Servicing Platform: MMAF does not originate contracts but mostly 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 2013-A.

Strong Parent: Fitch rates Massachusetts Mutual Life Insurance Company (MassMutual), MMAF's parent, 'AA/F1+'; Stable Outlook. Babson Capital Management (Babson) is the performance guarantor for 2013-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.

Rating Sensitivities

Unanticipated increases in the frequency of defaults or decreases in recovery rates could produce loss levels higher than the base case and could result in potential rating actions on the notes. Fitch evaluated the sensitivity of the ratings to increased obligor defaults in the portfolio by applying 'CCC' ratings to the unrated obligors in the portfolio, stressed down from the 'B' rating applied under the base recommended scenario. Additionally, recoveries were stressed by applying a stress of 50 percent to the base 48.2 percent WA recovery rate on the portfolio, down to 24.1 percent.

Fitch's analysis found that the transaction displays relatively little sensitivity to increased obligor defaults and decreased recovery rates. In both cases, the notes showed rating sensitivity of only one-to-two rating categories.

For more information about Fitch's subscription service FitchResearch, which includes all presale reports, surveillance, and credit reports on more than 20 asset classes, contact product sales at +1-212-908-0800 or at '[email protected]'.

Additional information is available at 'fitchratings.com'.

Applicable Criteria and Related Research:

--'Global Structured Finance Rating Criteria' (May 24,);

--'Global Rating Criteria for Corporate CDOs' (Aug. 12, 2012);

--'Criteria for Rating U.S. Equipment Lease and Loan ABS' (Dec. 28, 2012).

Applicable Criteria and Related Research: MMAF Equipment Finance Series 2013-A (US ABS)

http://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=715580

Criteria for Rating U.S. Equipment Lease and Loan ABS

http://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=697250

Global Rating Criteria for Corporate CDOs

http://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=683910

Global Structured Finance Rating Criteria