CNH Equipment Trust 2025-A Notes Assigned Ratings
Overview
- CNH Equipment Trust 2025-A's issuance is an ABS securitization backed by equipment retail installment sales contracts.
- We assigned our ratings to the class A-1, A-2a, A-2b, A-3, and A-4 notes.
- The ratings reflect our view of the transaction's credit support and legal structures, among other factors.
NEW YORK (S&P Global Ratings) March 19, 2025--S&P Global Ratings today assigned its ratings to CNH Equipment Trust 2025-A's asset-backed notes (see list).
The note issuance is an ABS securitization backed by equipment retail installment sales contracts.
The ratings reflect our view of:
- The availability of 6.87% credit support, inclusive of excess spread, for the class A (collectively, class A-1, A-2a, A-2b, A-3, and A-4) notes. The credit support provides coverage of approximately 4.75x, the midpoint of our cumulative net loss range of 1.25%-1.45%.
- Our expectation of the timely payment of periodic interest and principal by the legal final maturity date based on stressed cash flow modeling scenarios that we deem appropriate for the assigned ratings.
- Our expectation that under a moderate ('BBB') stress scenario of 1.75x and our cumulative net loss level and accounting for a moderate stress recovery rate, the assigned ratings on the class A notes will remain consistent with our credit stability criteria (see "S&P Global Ratings Definitions," published Dec. 2, 2024).
- The securitized equipment loan pool's collateral characteristics, considering the concentrations of agricultural and construction equipment contracts (89.78% and 10.22% of the balance, respectively).
- Our forward-looking view of the agricultural sector, which anticipates continued revenue and income effects on farmers due to weaker crop prices. It, however, gets partially offset by the expected increase in federal aid in 2025.
- The structural features that offset the liquidity risk associated with the pool's annual pay contracts (63.97% of the pool balance but with some diversification by calendar month when payments on annual pay contracts are due), including a non-amortizing cash reserve account that is initially funded at 2.00% of the initial pool balance and a discounting methodology that allows principal cash flows to be used to pay timely interest if needed.
- CNH Industrial Capital America LLC's (CNH) history of servicing 80 previous U.S. retail securitizations, and the management's lending experience through multiple cycles in the agricultural and construction equipment sectors. CNH is a wholly owned subsidiary of CNH Industrial Capital LLC (BBB+/Negative/--).
- The transaction's legal structure.
Related Criteria
- General Criteria: Environmental, Social, And Governance Principles In Credit Ratings, Oct. 10, 2021
- Criteria | Structured Finance | General: Global Framework For Payment Structure And Cash Flow Analysis Of Structured Finance Securities, Dec. 22, 2020
- Criteria | Structured Finance | General: Methodology To Derive Stressed Interest Rates In Structured Finance, Oct. 18, 2019
- Criteria | Structured Finance | ABS: Global Equipment ABS Methodology And Assumptions, May 31, 2019
- Criteria | Structured Finance | Legal: U.S. Structured Finance Asset Isolation And Special-Purpose Entity Criteria, May 15, 2019
- Criteria | Structured Finance | General: Counterparty Risk Framework: Methodology And Assumptions, March 8, 2019
- Criteria | Structured Finance | General: Incorporating Sovereign Risk In Rating Structured Finance Securities: Methodology And Assumptions, Jan. 30, 2019
- General Criteria: Methodology For Linking Long-Term And Short-Term Ratings, April 7, 2017
- Criteria | Structured Finance | General: Global Framework For Assessing Operational Risk In Structured Finance Transactions, Oct. 9, 2014
- General Criteria: Global Investment Criteria For Temporary Investments In Transaction Accounts, May 31, 2012
- General Criteria: Principles Of Credit Ratings, Feb. 16, 2011
- Criteria | Structured Finance | General: Methodology For Servicer Risk Assessment, May 28, 2009
Related Research
- Presale: CNH Equipment Trust 2025-A, March 6, 2025
- CNH Industrial Outlook Revised To Negative After Steeper Cyclical Downturn Than Anticipated; 'BBB+/A-2' Ratings Affirmed, Feb. 21, 2025
- CNH Industrial N.V., Dec. 16, 2024
- Credit Conditions North America Q1 2025 Slides: Policy Shifts, Rising Tensions, Dec. 12, 2024
- Economic Outlook U.S. Q1 2025: Steady Growth, Significant Policy Uncertainty, Nov. 26, 2024
- Two Ratings Raised And 14 Affirmed On Five CNH Equipment Trust Transactions, May 29, 2024
Ratings Assigned
CNH Equipment Trust 2025-A
- Class A-1, $98.40 million: A-1+ (sf)
- Class A-2a, $187.22 million: AAA (sf)
- Class A-2b, $187.22 million: AAA (sf)
- Class A-3, $324.44 million: AAA (sf)
- Class A-4, $53.48 million: AAA (sf)
European Endorsement Status
Global-scale credit rating(s) issued by S&P Global Ratings' affiliates based in the following jurisdictions [To read more, visit Endorsement of Credit Ratings] have been endorsed into the EU and/or the UK in accordance with the relevant CRA regulations. Note: Endorsements for U.S. Public Finance global-scale credit ratings are done per request. To review the endorsement status by credit rating, visit the spglobal.com/ratings website and search for the rated entity.
'sf' Identifier
The 'sf' identifier is assigned to ratings on structured finance or securitization instruments when required to comply with an applicable law or regulatory requirement or when S&P Global Ratings believes it appropriate. The addition of the 'sf' identifier to a rating does not change that rating's definition or our opinion about the issue's creditworthiness. For detailed information on the instruments assigned the 'sf' identifier, please see the appendix to "S&P Global Ratings Definitions" for the types of instruments that carry the 'sf' identifier. To see if a credit rating has a 'sf' identifier, visit the standardandpoors.com website and search for the rated entity.
| Primary Credit Analyst: | Steve D Martinez, New York + 1 (212) 438 2881; steve.martinez@spglobal.com |
| Secondary Contact: | Clayton Castro, Englewood + 1 (303) 721 4258; clayton.castro@spglobal.com |
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