Morningstar DBRS Assigns Provisional Credit Ratings to FHF Issuer Trust 2026-1

DBRS, Inc. (Morningstar DBRS) has assigned provisional credit ratings to the classes of notes to be issued by FHF Issuer Trust 2026-1.

The announcement follows a series of rating actions by the agency regarding FHF Issuer Trust transactions and other structured finance products. Morningstar DBRS is recognized as the world’s fourth largest credit ratings agency, maintaining a significant market presence in the United States, Canada, and Europe across various asset classes.

Context of FHF Issuer Trust Transactions

The provisional ratings for FHF Issuer Trust 2026-1 come amid ongoing monitoring of previous transactions within the same series. In recent credit rating actions, Morningstar DBRS confirmed seven credit ratings across two other FHF Issuer Trust transactions.

Analysis of FHF Issuer Trust 2024-1 and FHF Issuer Trust 2024-2 indicated that losses were tracking above the initial base-case cumulative net loss (CNL) expectations set by Morningstar DBRS.

Broader Structured Finance Activity

The assignment of ratings to FHF Issuer Trust 2026-1 is part of a broader trend of provisional credit assignments for asset-backed notes. For example, Morningstar DBRS assigned provisional credit ratings of (P) AAA (sf) to the Class A Series 2026-1 Asset-Backed Notes due May 16, 2026, in a separate transaction.

The agency also recently assigned provisional credit ratings to AutoNation Finance Trust 2026-1 (DRVPNK 2026-1) on January 15, 2026. That specific transaction included various classes of notes with the following provisional ratings:

• Class A-1 Notes: (P) R-1 (high) (sf) for $105,359,000
• Class A-2 Notes: (P) AAA (sf) for $222,894,000
• Class A-3 Notes: (P) AAA (sf) for $222,894,000
• Class A-4 Notes: (P) AAA (sf) for $83,786,000
• Class B Notes: (P) AA (high) (sf) for $37,193,000
• Class C Notes: (P) A (high) (sf) for $35,675,000
• Class D Notes: (P) BBB (high) (sf) for $41,368,000

In the AutoNation transaction, the ratings were based on the capital structure, available credit enhancement—including subordination, overcollateralization, a fully funded reserve account, and excess spread—and the experience of the management team.

AutoNation, Inc. Served as the performance guarantor, guaranteeing the payment and performance obligations of the servicer.

Rating Agency Methodology

Morningstar DBRS utilizes cumulative net loss (CNL) assumptions under various stress scenarios to determine if credit enhancement levels are sufficient to support the projected ratings. This analytical approach is designed to ensure that transactions can withstand stressed cash flow assumptions and repay investors according to the established terms.

The ratings process typically addresses the timely payment of interest on a monthly basis and the ultimate repayment of the principal.