Santander Finnish subsidiary notes get ‘AAA’ rating from Fitch

Fitch Ratings is expected to award a ‘AAA’ rating on notes issued by SCF Rahoituspalvelut Limited, which are backed by car loan receivables originated by Santander Consumer Finance (SCF) Oy.

SCF Oy is a 100% subsidiary of Norway based Santander Consumer Bank AS, which is a 100% subsidiary of Santander Consumer Finance SA, which itself is rated ‘A/Negative/F1′ by Fitch.

SCF Rahoituspalvelut Limited’s notes are rated ‘AAAsf(EXP)’ with ‘Outlook Stable’. The value of the notes is set at €402.4m. The car loan receivables come into the picture via the use of special purpose vehicles (SPVs), which will purchase the car loans and issue the notes. Proceeds from the issuance are used to finance car loans.

Fitch said it used a default assumption on the loans of 3% although defaults currently in SCF Oy’s portfolio are lower than those in SCF’s car loan portfolio in Norway. Fitch adds that recoveries achieved by SCF Oy are “the highest seen for European [car] ABS, with recoveries of over 75% in years 2009-2011.”

“A feature of the Finnish economy is the large number of highly indebted households, making private consumption sensitive to interest rate and house price shocks. Taxes on vehicles, especially large ones, are high and have a large impact on car pricing. Fitch does not expect any change in taxation in April 2012 to lower the used car prices outside of the niche. During 2012, Fitch expects a stable level of unemployment and interest rates, with auto loan performance stable compared to historic levels.”


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