News
ARC Publishes Global Consumer ABS Rating Criteria
30-09-2020

London, 30 September 2020 - ARC Ratings, S.A. (‘ARC’) has published its Global Consumer ABS Rating Criteria. This is an update to the criteria previously published in September 2019. This report can be accessed at www.arcratings.com.


ARC’s Global Consumer ABS Rating Criteria (the “Criteria”) apply to Asset Backed Securitisation transactions that benefit from a diversified collateral pool with a large number of underlying obligors. The Criteria apply to a wide variety of asset classes with fixed repayment profiles such as car loans, equipment leases and personal loans which can be secured or unsecured. For the avoidance of doubt, the Criteria cannot be used to rate RMBS transactions which are subject to asset-specific rating criteria.


This report provides an overview of how consumer asset backed transactions are analysed covering, amongst other things: a high level assessment of the assets, including the obligors, the receivables type and the underlying security (if any), including any residual value risk; an analysis of expected defaults, delinquencies, recoveries, prepayments and yield of the assets, all supplemented by a cash flow analysis.


ARC's key areas of analysis in rating Consumer ABS transactions are as follows:


- Asset and transaction analysis (including an operational review of the originator/servicer)


- Cash flow analysis


- Credit enhancement


- Legal review


Each transaction will be accompanied by a transaction-specific report that will describe the analysis undertaken, the rating rationale and also highlight any bespoke variations to the Criteria and the reasons for such variations.


These Criteria should be read in conjunction with ARC’s published ‘Global Structured Finance Methodology’ - dated September 2020’ and available at www.arcratings.com.

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