Fitch Affirms 3 Classes of AEP Texas Central Transition Funding III, LLC

Business Wire

NEW YORK--(BUSINESS WIRE)--

As part of its ongoing surveillance, Fitch Ratings has affirmed three classes of the AEP Texas Central Transition Funding III, LLC transaction as follows:

AEP Texas Central Transition Funding III, LLC
--Class A-1 at 'AAAsf'; Outlook Stable;
--Class A-2 at 'AAAsf'; Outlook Stable;
--Class A-3 at 'AAAsf'; Outlook Stable.

KEY RATING DRIVERS:

The transaction is performing within expectations, with levels of outstanding principal amounts in-line with the targeted amortization schedules. The true-up mechanism in the transaction is performing as expected, providing adequate credit support for all outstanding classes.

RATING SENSITIVITY:

As part of Fitch's initial rating sensitivity, Fitch conducted a break the bond case which provides an alternative means by which to measure the potential effects of rapid, significant declines in power consumption while capping the residential securitization charges at 20% of the total customer bill. This analysis determines the maximum level of forecasted energy decline that would cause a default in required payments on the securitizations or cause the tariff charges to exceed 20% of the total residual customer bill. Despite this severe decline in consumption, due to the true-up mechanisms, the tariff charges are able to pay all debt service by the legal final maturity date.

For further detail on the rating sensitivity analysis for Utility Tariff Bonds, please refer to Fitch's criteria titled Rating Criteria for U.S. Utility Tariff Bonds available at www.fitchratings.com.

Fitch's analysis of the Representation and Warranties (R&W) of this transaction can be found in 'AEP Texas Central Transition Funding III, LLC'. These R&W are compared to those of typical R&W for the asset class as detailed in the special report 'Representations, Warranties, and Enforcement Mechanisms in the Global Structured Finance Transactions' dated April 17, 2012.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:
--'Global Structured Finance Rating Criteria' May 24, 2013;
--'AEP Texas Central Transition Funding III, LLC (US ABS)' March 5, 2012;
--'AEP Texas Central Transition Funding III - Appendix' March 5, 2012;
--'Rating Criteria for U.S. Utility Tariff Bonds' Dec. 18, 2013.

Applicable Criteria and Related Research:
Global Structured Finance Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661
AEP Texas Central Transition Funding III, LLC Senior Secured Transition Bonds (US ABS)
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=673059
AEP Texas Central Transition Funding III, LLC Senior Secured Transition Bonds - Appendix
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=673065
Rating Criteria for U.S. Utility Tariff Bonds
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=726322

Additional Disclosure
Solicitation Status
http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=820262
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Contact:
Fitch Ratings
Primary Analyst:
Eugene Kushnir, +1-212-908-0830
Associate Director
Fitch Ratings, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst:
Du Trieu, +1-312-368-2091
Senior Director
or
Committee Chairperson:
John H. Bella, Jr., +1-212-908-0243
Managing Director
or
Media Relations:
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

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