Posted: 14 Oct 2009 10:58 AM PDT

2009-10-14 19:50:03 -

The resurgence of the U.S. wholesale vehicle market in 2009 has reversed the trend of heavy residual value (RV) losses on leased vehicles in late 2008 and steadied the performance of US auto lease ABS transactions, according to Fitch Ratings.

As a result, Fitch has observed growth in credit enhancement levels across all Fitch-rated auto lease ABS in the past year,

despite heavy RV losses in 2008. These increases in credit enhancement enable the transactions to support larger amounts of potential future RV losses, which Fitch views as the primary risk to auto lease ABS. It should be noted that elevated credit default levels will likely continue and some seasonal deterioration in RV performance in the next several months is likely to occur.

That being said, Fitch anticipates vehicle values to remain well above 2008 lows through next year due to positive supply factors. 'Improving asset performance and the transactions' structural strengths, such as non-declining credit enhancement targets, will result in stable rating performance for US auto lease ABS in the near term,' said Director Brad Sohl.

In 2008, volatile fuel prices, a challenging economy, concerns about the stability of U.S. auto manufacturers and other macroeconomic factors led to a significant decline in demand for used vehicles. Due to the significant run-up in oil prices during the summer of 2008, this demand weakness was initially borne primarily by trucks/SUVs. However, as consumer confidence plunged and demand slackened further in the seasonally weak winter months, secondary market values for virtually all vehicle types plummeted. By November 2008, WA monthly residual losses on Fitch's portfolio of rated auto lease ABS had surpassed 20% of the securitized residual value. Similarly, in December of 2008 the Manheim Used Vehicle Value Index published by Manheim Consulting, which measures wholesale used vehicle prices on a mix, mileage and seasonally-adjusted basis, dropped to a 13-year low of 98.

Since January of this year, used vehicle values have increased significantly. As of September 2009, the Manheim Index reached 118.5, an increase of 6.95% year over year and of 20.9% compared to December's low. Residual loss rates on Fitch rated auto lease ABS mirrored this improvement, as vehicle dispositions on the total portfolio in August resulted in nearly 10% gains of securitized residual value, compared to the losses of over 20% less than a year ago.

The stabilization of residual performance on most US auto lease ABS has served to rebuild credit enhancement facilities that were drawn upon during the turbulence of 2008. 'The building of these credit enhancement levels serves to protect the issued notes from the potential for future residual losses should vehicle values deteriorate significantly,' said Sohl.

In response to the improvement in asset performance and residual loss coverage levels, Fitch recently upgraded certain outstanding auto lease ABS. Additional information is available in Fitch's Sept. 17 press release, 'Fitch Takes Various Rating Actions on CARAT Lease Transactions', available at ' www.fitchratings.com : '.

Currently, Fitch-rated 2006 vintage 'AAA' auto lease ABS could support residual losses on returned vehicles well in excess of 60% without incurring a payment default; while 'AAA' notes for the 2007 and 2008 vintages support a range of 35-65%.

While some level of seasonal deterioration is expected in the coming winter months, Fitch's RV performance outlook for the near- to mid-term is positive, even considering potentially weak demand, as the drivers of supply are expected to remain constrained. The 11-12 million unit industry average forecast for U.S. vehicle sales in 2010 is generally above 2009 expectations, yet remains significantly lower than yearly levels in recent years. This drop in new vehicle sales is expected to limit the number of traded-in vehicles available for purchase.
Similarly, the decline in leasing penetration combined with lower fleet rental volume experienced in 2008 and 2009, will also contribute to fewer off-lease vehicles.

Fitch remains cautious as vehicle values and realization rates remain subject to consumer demand factors linked to the health of the overall economy, as well as factors such as volatile fuel prices. Additionally, credit defaults are expected to remain elevated as unemployment continues to drag performance down. However, the positive asset performance outlook for vehicle values leads to Fitch's Stable Outlook for all 'AAA'-rated auto lease notes. Similarly, subordinate auto lease ABS notes carry either Stable or Positive Rating Outlooks, with one class currently on Rating Watch Positive. The structural strengths of non-declining credit enhancement targets combined with a relative very short asset life, which results in rapid increases in loss coverage levels, contributes further to Fitch's view of stable near-term rating performance for the sector.

Fitch will continue to monitor the asset performance of auto lease receivables and the health of the wholesale vehicle market as it applies to the rating of auto lease ABS.

Additional information is available at ' www.fitchratings.com : '

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS : .

IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE ' WWW.FITCHRATINGS.COM : '.

PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Fitch RatingsBrad Sohl, 312-368-3127 (Chicago)Juveria
Mozaffar, 312-606-2335 (Chicago)Ben Tano, 212-908-0871 (New York)Media
Relations:Sandro Scenga, 212-908-0278 (New York) sandro.scenga@fitchratings.com : mailto:sandro.scenga@fitchratings.com

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From the Journal Gazette - FortWayne.com

Posted: 11 Oct 2009 02:55 AM PDT

The health of the regional job market is on the mend after months of suffering more acutely than the rest of the country.

In the three months ended Sept. 30, employers in northeast Indiana and northwest Ohio announced plans to add 1,080 more workers than they planned to cut, according to a quarterly analysis by The Journal Gazette. Its the third such analysis this year and the first to suggest a net gain of jobs in the 15-county region.

As in the previous two quarters, manufacturing was the dominant sector in the most recent economic scorecard. Big announcements at two of the regions manufacturing powerhouses accounted for 1,000 of the 1,670 jobs that employers promised to create.

General Motors Co. announced last month that with the closure of a truck plant in Pontiac, Mich., it would add a third shift at its Allen County assembly plant, bringing 700 jobs to the region by April.

And after a private-equity firm bought Decatur-based Fleetwood RV, it announced in August that it would add 300 jobs to its workforce of 630 by mid-November.

The analysis is based on announcements of which The Journal Gazette was already aware, but it does provide a snapshot of the area economy. And John Stafford, director of the Community Research Center at Indiana University-Purdue University Fort Wayne, said the numbers jibe with statistics his agency is compiling.

Were just measuring audible sound, he said, explaining that many smaller job decisions probably arent publicly announced.

Even so, the numbers reflect a tentative recovery in a regional manufacturing economy that fell further and faster than other sectors did.

In the first three months of 2009, companies announced 2,500 layoffs or cuts and 850 hires. In the second quarter, 4,560 layoffs and cuts were announced, compared with just 512 hires.

The region and the entire Midwest lost manufacturing jobs this year as companies cut production more quickly than sales plummeted, cutting deeply into inventories, said William A. Strauss, a senior economist at the Federal Reserve Bank of Chicago who compiles the Midwest Manufacturing Index.

I think the financial crisis hit manufacturing more heavily than it did other parts of the economy, Strauss said.

Car and truck sales, for example, fell 27 percent in the first eight months of 2009 compared with the same period of 2008. But production was slashed by 46 percent, Strauss said.

The recession and tighter credit markets made it difficult for consumers and small manufacturers to get loans and do business. And it helped tip some huge companies such as General Motors and Fleetwood Enterprises into bankruptcy.

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Man testifies money motivated ransom attempt - Riverside Press Enterprise

Posted: 07 Oct 2009 11:31 PM PDT

A Victorville man testified Wednesday that money motivated him to kidnap a Riverside woman for ransom.

Mark Herbert Warren, on trial in Riverside, said his business was having money problems. He calculated he needed $140,000 so that was what he requested in the ransom note when he is suspected of kidnapping Linda Boecker from her Riverside home, Warren said.

He will continue testifying today.

Over the last week, Warren has listened to Boecker and her husband, Ted, testify about the seven hours she was kept in a crate. A number of people testified Wednesday morning that files found in Warren's possession included their home addresses with maps and notes.

Warren, a general contractor who also ran a dry-erase board company, failed to articulate how he decided on kidnappings. He said he wanted the most control over the situation and wanted to minimize the possibility for injuries so he decided against robbing banks.

"I don't know," he said, when asked by Deputy Public Defender Melaniee Collins why. "Even today I'd have to say it happened over a period of time. It wasn't an overnight decision that I just woke up and decided to commit a crime."

A month before the March 2007 kidnapping, he built a crate based on a homemade diagram.

To minimize injury, he put 4-inch foam around the top and sides and a twin mattress in the bottom and used a forklift to move it into his cargo van.

He said he did not target the Boeckers because of any personal reason but because their house met a certain set of criteria -- they didn't have young children and he wouldn't be interrupted.

His plan was to leave Linda Boecker on the south side of Lake Matthews with a tarp, sleeping bag and pillow so her husband could find her after the money was exchanged. He said he had no intention of killing her.

While investigating the alleged kidnapping, police found files containing maps marking properties owned by business men and women and other personal information such as printouts of online searches.

The one for Chevrolet dealership owner Dalip Singh Sethi had a satellite photo of his house. He said "Oh my God" when Deputy District Attorney Amy Barajas showed a page of addresses for his wife and son.

Another file contained a long list of businesses and owner information on auto and RV dealerships, real estate companies and jewelry businesses in the Inland area and San Diego County. The Boeckers ran a real estate company.

"Charles main house is on that private drive @ the end. No Good," stated one sticky note in the file for Charles Woodard Dutton III, general manager of the Dutton Motor Company.

The word "Good" was written on the folder with his name on it.

Reach Sonja Bjelland at 951-368-9642 or sbjelland@PE.com

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