DBRS Morningstar Comments on Globaldrive UK Dealer Floorplan Funding I Limited Following Amendment

DBRS Ratings Limited (DBRS Morningstar) reviewed the impact of an amendment (the Amendment) to the transaction Globaldrive UK Dealer Floorplan Funding I Limited (the Issuer) and concluded that the Amendment will not in and of itself result in a downgrade or withdrawal of the rating of the Series 2007-1 Class A Loan Notes (the Notes). The effective date of the amendment is 14 September 2020.

The Amendment consists in the renewal of the transaction with the following changes:
-- An extension of the revolving period to the payment date in March 2021 from September 2020;
-- An extension of the final maturity to 30 months after the end of the revolving period from 21 months (effectively to the payment date in September 2023 from June 2022);
-- A decrease in the credit enhancement to the Notes to 30.0% from 37.0%;
-- An increase of the commitment fee to 1.10%;
-- An increase of the Notes margin to 1.25% from 0.70%; and
-- An optional reserve mechanism which covers any shortfalls of senior items in the interest waterfall.

DBRS Morningstar performed its analysis in the line with a moderate macroeconomic scenario detailed in the following reports: https://www.dbrsmorningstar.com/research/366542/global-macroeconomic-scenarios-september-update and https://www.dbrsmorningstar.com/research/359903/global-macroeconomic-scenarios-application-to-credit-ratings. However, DBRS Morningstar notes that transaction performance is very sensitive to the development of the payment rate, which it monitors closely given the current volatile environment.

On 31 August 2020, the transaction came out of two successive waiver periods in the context of the Coronavirus Disease (COVID-19) pandemic, during which the three-month average payment rate trigger was suspended. For more information on the initial suspension and its extension, please see the respective DBRS Morningstar press releases: https://www.dbrsmorningstar.com/research/360500/dbrs-morningstar-comments-on-globaldrive-uk-dealer-floorplan-funding-i-limited-following-amendment and https://www.dbrsmorningstar.com/research/364943/dbrs-morningstar-comments-on-globaldrive-uk-dealer-floorplan-funding-i-limited-following-amendment.On 31 August 2020, with 22.0% the three-monthly average payment rate returned to above the 18.0% trigger level.

More information about DBRS Morningstar’s view on the impact of the coronavirus pandemic on auto-wholesale securitisations can be found at: https://www.dbrsmorningstar.com/research/359606/the-impact-of-covid-19-on-global-auto-wholesale-transactions.

The transaction is a securitisation of auto wholesale receivables originated in the UK by FCE Bank plc and related to the purchase and financing by motor vehicle dealers of their new car/truck inventory and dealer vehicle plan receivables.

As of 31 August 2020, no defaulted receivables had been recorded in the transaction since closing.

More information on the transaction can be found at: https://www.dbrsmorningstar.com/issuers/17008.

For more information regarding rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/357883.

For more information regarding structured finance rating methodologies and Coronavirus Disease (COVID-19), please see the following DBRS Morningstar press release: https://www.dbrsmorningstar.com/research/358308.

ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework and its methodologies can be found at: https://www.dbrsmorningstar.com/research/357792.

Notes:
All figures are in British pound sterling unless otherwise noted.

For more information on this credit or on this industry, visit www.dbrsmorningsar.com or contact us at info@dbrsmorningstar.com.

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