DBRS Publishes Updated Methodology for Rating Marine Container Securitizations

DBRS, Inc. (DBRS) published an updated methodology entitled “Rating Marine Container Securitizations.”

This update supersedes the previous version published in June 2015. The rating approach described in the methodology remains substantially unchanged. In addition to the general editorial changes and updates to the industry data, DBRS also updated stress assumptions for cash flow analysis.

The updates related to the cash flow analysis generally reflect the industry trend towards the more stable collateral fleet utilization rates and a decline over time in the rental per diem rates and include the following:

1. Stresses applied to the short-term lease collateral reflect the relative stability in performance due to a diminished significance of such collateral in the lessors’ portfolios.

2. Updated residual value stresses, which are reflective of the observed price volatility for newbuild container boxes.

3. Consideration of the impact of the widely discussed case of the bankruptcy, in August 2016, of Hanjin Shipping Co. (South Korea's largest container line and, at the time, one of the world’s top ten container carriers in terms of capacity).

4. In certain cases, consideration of the value of remaining collateral (typically, estimated on a “going concern” basis) in the event a securitization transaction’s principal is not repaid by the stated maturity date.

5. In certain circumstances, that DBRS may utilize and publish the more generalized collateral performance assumptions, which, in its view, would reflect the then-current state of a broader industry.

DBRS does not view the updates to the methodology to be material and has determined that no ratings will be changed because of this update.

Notes:
DBRS rating definitions and the terms of use of such ratings are available at www.dbrs.com.

DBRS’s methodologies and criteria are available at www.dbrs.com or by contacting us at info@dbrs.com.