Ford Credit Floorplan Master Owner Trust A (Series 2019-4)

Presale:

Ford Credit Floorplan Master Owner Trust A (Series2019-4)September 12, 2019

Preliminary Ratings

Class Preliminary rating Interest rate Preliminary amount (mil. $)Credit support (% of collateral

amount)

A AAA (sf) Fixed 350.000 24.35

B AA+ (sf) Fixed 16.118 20.85

C(i) NR Fixed 23.026 15.85

D(i) NR Fixed 13.816 12.85

Note: This presale report is based on information as of Sept. 12, 2019. The ratings shown are preliminary. Subsequent information may result inthe assignment of final ratings that differ from the preliminary ratings. Accordingly, the preliminary ratings should not be construed as evidenceof final ratings. This report does not constitute a recommendation to buy, hold, or sell securities. (i)The depositors will initially retain the class Cand D notes. NR--Not rated.

Profile

Expected closing date Sept. 20, 2019.

Expected final payment date Sept. 15, 2024.

Final maturity date Sept. 15, 2026.

Interest payment date The 15th of each month, beginning Oct. 15, 2019.

Collateral A revolving pool of receivables that were originated in connection with dealerspurchasing and financing primarily Ford-manufactured new and used cars, trucks, andutility vehicles.

Issuer Ford Credit Floorplan Master Owner Trust A.

Sponsor, servicer, administrator,and originator

Ford Motor Credit Co. LLC (BBB/Negative/A-2).

Backup servicer Wells Fargo Bank N.A. (A+/Stable/A-1).

Depositors Ford Credit Floorplan Corp. and Ford Credit Floorplan LLC.

Indenture trustee The Bank of New York Mellon (AA-/Stable/A-1+).

Owner trustee U.S. Bank Trust N.A.

Lead underwriter BofA Securities Inc.

Presale:

Ford Credit Floorplan Master Owner Trust A (Series2019-4)September 12, 2019

PRIMARY CREDIT ANALYST

Timothy J Moran, CFA, FRM

New York

(1) 212-438-2440

[email protected]

SECONDARY CONTACT

Jennie P Lam

New York

(1) 212-438-2524

[email protected]

www.standardandpoors.com September 12, 2019 1

© S&P Global Ratings. All rights reserved. No reprint or dissemination without S&P Global Ratings' permission. See Terms of Use/Disclaimeron the last page.

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mailto: [email protected]




Rationale

The preliminary ratings assigned to Ford Credit Floorplan Master Owner Trust A's (the trust's)asset-backed notes series 2019-4 reflect:

- Our view that the 24.35% and 20.85% hard credit support (expressed as a percentage of thecollateral amount) for the class A and B notes, respectively, is sufficient to withstand our stressscenarios commensurate with the assigned preliminary 'AAA (sf)' and 'AA+ (sf)' ratings.

- Our issuer credit rating (ICR) on the primary manufacturer, Ford Motor Co. (Ford;BBB/Negative/A-2).

- The 25.00% three-month principal payment rate trigger, which, when breached, causes asubordination step-up period in which the transaction's required subordination amount willincrease to 16.50% from 12.50% of the collateral amount, or, if sufficient credit enhancementis not provided, an early amortization event will occur.

- The 21.00% three-month principal payment rate trigger, which, when breached, causes anearly amortization event to occur.

- Our expectation that under a moderate ('BBB') stress scenario, all else being equal, the ratingswill remain within one rating category of the assigned preliminary 'AAA (sf)' and 'AA+ (sf)'ratings for the class A and B notes, respectively, during the next 12 months, based on our creditstability criteria (see "Methodology: Credit Stability Criteria," published May 3, 2010).

- Our view of the relative financial strength of the dealers that have accounts designated to thetrust (the underlying obligors of the floorplan loans) and Ford's sizable market share in the U.S.,which mitigates the relatively high concentration of light trucks in its product mix (i.e., thevehicles securing the floorplan loans).

- Ford Motor Credit Co. LLC's (Ford Credit's) servicing experience and our opinion of the qualityand consistency of its account origination, account management, and auditing practices.

- Wells Fargo Bank N.A.'s (the backup servicer's) servicing experience and our view of its ability toassume the successor servicer role if the servicer is terminated.

- Our expectation of timely interest and principal payments by the final maturity date accordingto the transaction documents, based on stressed cash flow modeling scenarios, usingassumptions commensurate with the assigned preliminary ratings.

- The transaction's underlying payment structure, legal structure, and cash flow mechanics.

Transaction Overview

The collateral consists of receivables secured by vehicles from designated revolving floorplanaccounts offered by Ford Credit to Ford's retail automobile dealers (see chart). Each receivable isan obligation in which the dealer agrees to repay the loan amount that it incurred whenpurchasing a vehicle for its inventory. The related vehicle secures the receivable. The dealergenerally repays the related receivables when it sells the underlying vehicle.



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Presale: Ford Credit Floorplan Master Owner Trust A (Series 2019-4)

A dealer's inventory may include new and used cars and light-, medium-, and heavy-duty trucks,which include vans and other vehicle classifications, such as SUVs, crossover vehicles, andvehicles intended for fleet sales or sales of 10 or more vehicles to a corporation or governmentalagency. Medium- and heavy-duty trucks are typically delivered as incomplete vehicles or chassiscabs that the dealer may send to a third party for final assembly.

The trust is a master owner trust that issues notes through discrete series. The series 2019-4issuance will include four classes of notes, classes A, B, C, and D, each of which will have afixed-rate coupon. The transaction is scheduled to pay principal to the class A, B, C, and Dnoteholders on the expected final payment date However, S&P Global Ratings' credit ratingsaddress principal payments by the final maturity date.

Changes From The Series 2019-3 Transaction

There are no significant changes to the transaction structure from that of the series 2019-3 issuedout of this trust in April 2019.

The trust's collateral performance remains steady, with losses at 0%. However, payment ratesdeclined to approximately 36% for the six months ended June 2019, compared with an average ofapproximately 40% in 2017 and 2018; though they are still well in excess of the 25% payment ratetrigger.



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Ford Motor Co.

Ford is the primary manufacturer of the vehicles securing receivables sold to the trust. Ford is oneof the world's largest automakers, based on unit sales, with worldwide vehicle sales ofapproximately 2.8 million for the six months ended June 2019. The company is focused on twobrands: Ford and Lincoln. It also provides retail and dealer financing, leases, and insurancethrough its wholly owned subsidiary, Ford Credit. Ford benefits from sizable market shares acrossmost major North American vehicle segments, particularly the full-size pickup truck market.

Manufacturer-related risks

The obligors of a non-diversified auto dealer floorplan (ADFP) pool are predominantly franchiseddealers. We view these dealers' financial health as being largely dependent on those of the relatedmanufacturers (Ford, in this transaction). Accordingly, we believe a manufacturer bankruptcy--anevent risk in non-diversified ADFP transactions--could decrease the manufacturer's support suchas sales incentives and other payments, to the dealer. Under this stressed scenario, the relateddealer may be left with a relatively large inventory of vehicles from a bankrupt manufacturer thatis not providing sales support or payment reimbursements. Therefore, we view our ICR on Ford asa differentiating factor affecting the credit quality of floorplan loans sold to the trust.

Ford Motor Credit Co. LLC

Ford Credit, a wholly owned subsidiary of Ford, was established in 1959 to provide financing forFord vehicles and to support Ford dealers. It also provides financing services to and throughdealers of Ford- and Lincoln-brand vehicles, as well as the non-Ford vehicles these dealers andtheir affiliates sell. The transaction limits non-Ford vehicles to 10% for manufacturers rated 'A-' orhigher by S&P Global Ratings and 2% for manufacturers rated 'BBB+' or lower.

Ford Credit will service the receivables according to the customary policies and procedures that ituses in servicing dealer floorplan receivables for its own account and for others. It also hasweb-based servicing policies and procedures that are designed to ensure common servicingpractices for all receivables.

Servicing overview

In addition to a typical servicing and collection function, inventory monitoring is important forfloorplan transactions because of the assorted parties involved, the receivables' high turnoverrate, and the high value of the collateral securing the receivables. According to Ford Credit, itreviews the dealer's financial statements and audits its inventory and sales records regularly toevaluate each dealer's financial position and verify that the dealer possesses the financedvehicles and promptly pays each receivable following the vehicle's sale. Ford Credit engages athird-party vendor to perform on-site wholesale inventory audits, the frequency of which dependson the dealer's risk rating.

Ford Credit is the servicer for the trust, and Wells Fargo Bank N.A. is the backup servicer. Thebackup servicer must confirm certain data in the monthly investor report and become thesuccessor servicer if, for any reason, Ford Credit is terminated as the servicer. Wells Fargo BankN.A. services dealer floorplan receivables for itself and others.



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The servicer must deposit all interest and principal collections into a collection account within twobusiness days after the receivables have been processed. However, if certain provisions in thetransaction documents are met, including that S&P Global Ratings' short-term ICR on the serviceris at least 'A-1', the servicer may make a single collections deposit into a collection account on thepayment date.

Legal Structure

Ford Credit, the originator, will sell and transfer its right, title, and interest in all of the receivablesand other floorplan assets, as well as the collateral security for the accounts, to the depositors,Ford Credit Floorplan Corp. and Ford Credit Floorplan LLC. The depositors, which are bothstructured to be bankruptcy-remote special-purpose entities, will grant a perfected securityinterest in the receivables and the collateral security to the trust, which will then grant a securityinterest to the indenture trustee on the noteholders' behalf. In rating this transaction, S&P GlobalRatings will review the relevant legal matters outlined in its criteria.

Credit Support

According to the transaction documents, the credit support for the class A notes will total 24.35%of the collateral amount and is structured as follows:

- The class B notes equal 3.50% of the collateral amount.

- The class C notes equal 5.00% of the collateral amount.

- The class D notes equal 3.00% of the collateral amount.

- The available subordinated amount equals 12.50% of the collateral amount.

- The required reserve account amount for any payment date will equal approximately 0.40% ofthe adjusted invested amount or 0.35% of the collateral amount.

According to the transaction documents, the credit support for the class B notes will total 20.85%of the collateral amount and is structured as follows:

- The class C notes equal 5.00% of the collateral amount.

- The class D notes equal 3.00% of the collateral amount.

- The available subordinated amount equals 12.50% of the collateral amount.

- The required reserve account amount for any payment date will equal approximately 0.40% ofthe adjusted invested amount or 0.35% of the collateral amount.

Available subordinated amount and subordination step-up period

During the subordination step-up period, the transaction's required subordination amount willincrease to 16.50% from 12.50% of the collateral amount if the three-month average principalpayment rate is less than 25.00%. Alternatively, the depositors may raise the required reserveaccount amount in lieu of increasing the required subordinated amount. That increase wouldequal the increase otherwise required for the subordinated percentage (the subordinatedpercentage will increase to 19.76% from 14.29% of the series 2019-4 notes' initial balance duringa subordination step-up period).



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If the depositors fail to deposit this higher amount into the reserve account on or before thedistribution date, the required subordination amount will automatically increase to 16.50% of thecollateral amount. The required available subordinated amount is based on the initial investedamount. An early amortization event will occur if the available subordinated amount is less thanthe required subordinated amount.

The series 2019-4 transaction structure also incorporates an incremental subordination feature. Ifthe dealer, manufacturer, and other collateral characteristics exceed the concentration limitsestablished in the transaction documents or the receivables become ineligible, the requiredavailable subordinated amount level will increase by an amount equal to the excess concentrationamounts.

Reserve account

The required reserve account amount will increase to 4.40% of the series 2019-4 notes' initialbalance if an early amortization event occurs. The amounts held in the reserve account will beavailable to cover any shortfalls in the notes' monthly interest, the monthly servicing fee, and anydefaults. If a reserve account shortfall occurs, available depositor collections will be deposited inthe reserve account to the required amount. On the final maturity date, the funds in the reserveaccount will be available to pay the notes' outstanding principal amount.

Structural Overview And Payment Priority

Allocations

The series 2019-4 transaction has three distinct allocation periods: revolving, accumulation, andearly amortization. The revolving period goes from the closing date until the earlier of theaccumulation period start date or the business day immediately preceding an early amortizationevent.

For all three periods, the interest collections (interest, fees, investment earnings, and recoveries)will be allocated to the series 2019-4 notes based on the floating allocation percentage or theseries 2019-4 notes' proportional share of the trust's receivables.

During the revolving period, principal collections will be allocated to the series 2019-4 notes basedon the floating investor percentage. During the controlled accumulation and early amortizationperiods, the series 2019-4 notes' allocation of the trust's principal collections will be based on thefixed investor percentage, which equals the series 2019-4 notes' share of the trust at the end ofthe revolving period. The fixed investor percentage might cause the series 2019-4 notes toamortize more quickly than if the collections were distributed strictly based on the series'proportional share of the trust's receivables.

Asset test

The transaction structure requires the depositors to hold principal receivables equal to 100% ofthe sum of the series 2019-4 notes' initial invested amount plus the required subordinatedamount.



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Payment priority--finance charge collections

On each distribution date, the indenture trustee will apply the interest collections allocated to theseries 2019-4 notes in the priority shown in table 1.

Table 1

Payment Waterfall

Priority Payment

1 Class A monthly interest.

2 Class B monthly interest.

3 Class C monthly interest.

4 Class D monthly interest.

5 Transaction fees and expenses to the indenture trustee, owner trustee, and asset representatives (up to$375,000 per year).

6 Servicing fee (1.0% annualized if Ford Credit is no longer the servicer) and the backup servicing fee(0.0065% annualized).

7 Treat an amount equal to the investor default amount as the investor principal collections(i).

8 An amount up to the reserve account deposit amount.

9 Treat an amount equal to the unreimbursed investor charge-offs as the investor principal collections(ii).

10 Treat an amount equal to the unreimbursed reallocated principal collections as the investor principalcollections(ii).

11 An amount needed to fund the accumulation period reserve account up to the required amount.

12 An amount equal to the servicing fees if Ford Credit is the servicer.

13 An amount needed to fund the available subordinated amount up to the required amount(iii).

14 Additional trustee fees.

15 Additional servicing fees.

16 An amount needed to cover any shortfalls in other series.

17 Any remainder to the depositor interest holders.

(i)In item 7, the available interest collections will cover the current monthly defaults, if any, and other items that would otherwise reduce thepool balance. (ii)The amounts paid under items 9 and 10 will make principal payments to bring the invested amount back into parity with theperforming pool balance (reimburse the noteholders for losses and reimburse the reallocated principal collections that were not covered inprevious months). (iii)The amounts paid under item 13 will turbo the notes to re-establish the subordination amounts that were reduced inprevious collection periods and absorb losses that the excess spread did not cover. Ford Credit--Ford Motor Credit Co. LLC.

A payment shortfall will occur if the floating interest collections for the series 2019-4 notes areinsufficient to cover the series' servicing fees, trustee fees, the notes' monthly interest, and theseries' share of defaulted receivables. Payment shortfalls will be covered first by the availableexcess interest collections from other series in the trust, then by available depositor collections,then by the amounts deposited into the reserve account, and then by the principal collectionreallocation. Any unreimbursed reallocation of available depositor collections will result in awrite-down of the available subordinated amount. If the available subordinated amount is belowthe required levels for any month, an early amortization period will begin.



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Payment priority--principal collections

During the revolving period, the indenture trustee will pay the depositors the principal collectionsallocated to the series 2019-4 notes in exchange for the new receivables that are sold to the trust.If the pool balance is less than the required amount, the indenture trustee will then depositenough principal collections into the excess funding account (that it would otherwise allocate tothe depositors) to cure the shortfall in the required pool balance.

The controlled accumulation period can range from one to six months, depending on the trust'sprincipal payment rate and the payment maturities of any other series issued from the trust. Eachmonth during the controlled accumulation period, the indenture trustee will deposit the principalcollections into the principal funding account, up to the controlled deposit amount. The excessprincipal will continue to be reinvested in new receivables or shared across other series asneeded. The indenture trustee will distribute the amounts held in the principal funding accountduring the accumulation period to the noteholders in a soft bullet (or nonguaranteed) payment onthe expected final payment date.

Before the accumulation period starts, the available investor interest collections will fund anaccumulation period reserve account to provide funds to pay interest on the notes in the event of anegative carry. The transaction documents require that the amount deposited into theaccumulation period reserve account equal 0.25% of the series 2019-4 notes' initial principalbalance.

The transaction structure incorporates early amortization events that will occur under certaincircumstances, which would then initiate the early amortization period and end the revolving orcontrolled accumulation period. During the early amortization period, the indenture trustee willuse the available investor principal collections and the available depositor collections (in anamount not to exceed the available subordinated amount) to make principal distributions on eachpayment date to the class A notes until paid in full, and then pay any remainder to the depositorinterest holders (i.e., class B, C, and D noteholders).

Amortization events

An amortization event will occur if any of the following events occurs:

- The average monthly payment rate for the three preceding collection periods is less than 21%on any determination date.

- The available subordinated amount falls below the required subordinated amount (12.50% ofthe collateral amount or 16.50% of the collateral amount during a subordination step-upperiod) for five business days.

- The amount deposited into the excess funding account exceeds 30% of the sum of the adjustedinvested amounts of all outstanding series the trust has issued for three consecutive collectionperiods.

- The series 2019-4 notes are not paid in full on the expected final payment date.

- The depositors fail to make the required distributions or deposits, violate other covenants andagreements, or make materially incorrect representations, and any one of these breaches is notcured within a specified period.

- A servicer termination event occurs that adversely affects the series 2019-4 notes.



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- The series 2019-4 notes are accelerated following an event of default under the indenture.Events of default include failure to pay interest or principal when due, failure to observe amaterial covenant, or an insolvency of the issuer.

Additional early amortization events include the depositors' failure to transfer the receivablesfrom the additional accounts as the transaction documents require, Ford's or Ford Credit'sinsolvency, and the trust being subject to regulation as an investment company under theInvestment Company Act of 1940.

Collateral Overview And Master Trust Statistics

The collateral comprises receivables generated under lines of credit that Ford Credit extends todealers throughout the U.S. Dealers use the floorplan financing to purchase new and used carsand trucks pending their sale to the ultimate retail buyer. Substantially all of the vehicles thathave been financed by the securitized floorplan loans were manufactured by Ford. Dealersgenerally must repay the floorplan loan as soon as they sell the underlying vehicle.

As of June 30, 2019, the trust's portfolio consisted of 3,065 designated dealer accounts andapproximately $19.25 billion in principal receivables with an average dealer balance ofapproximately $6.28 million per account. The weighted average spread above the prime rate thatFord Credit charges the dealers in the floorplan pool is 1.22% per year.

Concentration limits

The trust incorporates the following concentration limits, which are each shown as a percentageof the pool balance:

- A 5% dealer concentration limit for dealers affiliated with AutoNation Inc. (BBB-/Stable/A-3)and 2% for all others,

- A 4% development dealer concentration limit,

- A 4% fleet concentration limit,

- A 10% manufacturer concentration limit for manufacturers (other than Ford) that S&P GlobalRatings rates 'A-' or higher and 2% for manufacturers (other than Ford) that S&P Global Ratingsrates 'BBB+' or lower,

- A 2% medium- and heavy-duty truck concentration limit, and

- A 20% used-vehicle concentration limit.

Geographic distribution

Table 2 shows the geographic distribution of the vehicle inventories for the receivables in the trustportfolio.

Table 2

Geographic Distribution Of Trust Receivables(i)

State Receivables outstanding (%)

Texas 13.7



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Table 2

Geographic Distribution Of TrustReceivables(i) (cont.)

State Receivables outstanding (%)

California 7.6

Florida 7.0

Michigan 5.3

Other(ii) 66.4

(i)As of June 30, 2019. (ii)No other state represents more than 5%.

Dealer financial strength and risk ratings

The obligors of a non-diversified ADFP pool are predominantly franchised dealers, whose financialhealth we view as being largely dependent on that of the related manufacturer. Key factorsconsidered in determining this financial strength include the dealer base's overall profitability andnet worth through business cycles, the service absorption rate (the parts and service profitsexpressed as a percentage of a dealer's fixed costs), and the degree to which the dealer is part of amultibrand dealer group.

Ford Credit uses a proprietary model to assign each dealer a risk rating, and ranks these riskratings in four groups, with Group I being the lowest risk and Group IV the highest risk (see table 3).Ford Credit reviews each dealer's credit at least annually and adjusts the dealer's risk rating, ifnecessary. Ford Credit also uses historical performance data to identify key financial indicatorsthat help predict each dealer's ability to meet financial obligations. These indicators include thedealer's capitalization and leverage, liquidity and cash flow, profitability, and credit history withFord Credit.

As of June 30, 2019, the Group III and IV combined receivables balance accounted for 0.4% of thepool balance, up from 0.3% for the same period in 2018. The Group I receivables balance hasaccounted for more than 70% of the pool balance since 2010, and this percentage recentlyincreased to account for almost 90% of the pool balance. We believe the higher Ford vehicle salesvolumes since 2009 have contributed to the improved risk ratings.

Table 3

Ford Credit Dealer Risk Ratings (%)

As of June 30 Year ended Dec. 31

2019 2018 2018 2017 2016 2015 2014 2013 2012 2011

Group I 89.8 89.8 89.0 89.6 88.1 79.9 79.0 79.6 78.9 77.1

Group II 5.5 5.1 5.3 5.1 6.4 14.2 15.8 15.7 15.0 17.5

Group III 0.3 0.2 0.2 0.4 0.4 1.3 0.9 2.0 1.3 1.7

Group IV 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Other(i) 4.3 4.8 5.5 4.9 5.1 4.6 4.4 2.8 4.7 3.7

(i)Includes dealers that have no dealer risk rating because Ford Credit only provides in-transit financing for the dealer or is in the process ofterminating the dealer's financing.



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Age distribution

Age distribution is the number of days Ford Credit has financed each receivable, expressed as apercentage of the receivables' total principal balance (see table 4). For receivables relating toFord-manufactured or Ford–distributed new vehicles that are in transit, the age distributionmeasures the receivables' age from the date the related vehicles were released from the factory orcustoms, or during maritime transit from the port of export, as applicable. For receivables fromFord-manufactured or Ford–distributed new vehicles that have been delivered to the dealer, thedistribution measures the receivables' age from the date the related vehicles were actuallydelivered to the dealer. In our view, having older inventory, specifically over 270 days old, indicateslower turnover rate and potentially lower payment rates because aged inventory can precipitateinventory discounting or production cutbacks.

As of June 30, 2019, the over-270-days receivables balance was 3.5% of the pool balance, downfrom 3.8% a year earlier, and unchanged from 3.5% as of year-end 2015. The 2015 figure reflectedparticularly strong inventory levels due to record automotive industry and Ford sales, andincreased dealer stocking of vehicles in anticipation of model change-overs and year-endbuild-out. The year-end 2018 balance of 4.2% is closer to pre-2015 levels and represents a returnto more normalized sales and inventory levels.

Table 4

Age Distribution Of The Trust Portfolio (%)

As of June30 Year ended Dec. 31

Days outstanding 2019 2018 2018 2017 2016 2015 2014 2013 2012 2011

1-120 75.0 77.1 84.2 84.0 78.8 82.6 76.5 80.2 84.4 85.5

121-180 12.1 10.3 6.8 5.8 8.0 8.0 11.0 9.5 6.7 7.6

181-270 9.4 8.7 4.8 4.7 6.7 5.9 7.8 5.7 4.8 4.1

Over 270 3.5 3.8 4.2 5.5 6.4 3.5 4.7 4.6 4.1 2.8

Collateral Historical Performance

Payment rates

Payment rates denote inventory turnover and, as a result, often indicate whether inventorydiscounting or production cutbacks may be forthcoming. The trust's average monthly paymentrates have trended lower since the 2011 average of 48.1% as vehicle sales moderated (see table5). Since 2015, sales have declined, lowering payment rates. Although payment rates remain wellabove the 25% payment rate trigger level for the trust and rates for the second of the year aretypically higher than those for the first half, the average payment rate for the six months endedJune 30, 2019, is the lowest observed for comparable periods since 2008.



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Table 5

Monthly Payment Rates For Ford Credit Floorplan Master Owner Trust A


2019 2018 2018 2017 2016 2015 2014 2013 2012 2011

Highest month (%) 39.5 41.0 48.4 45.9 44.9 52.6 43.6 49.4 55.3 56.1

Lowest month (%) 31.6 33.8 33.8 34.3 34.5 36.4 33.5 36.3 41.2 40.4

Avg. of the months in theperiod (%)

36.2 38.8 40.4 40.5 38.9 44.6 40.0 43.0 46.3 48.1

Net losses

The trust has had no net losses (see table 6). The significant assistance that Ford offers its dealerbase, including repurchasing certain vehicles, influences the historical loss performance. Thisassistance helps mitigate losses, especially during times of financial stress for the dealers.However, in our stress scenarios, we consider factors other than historical losses whendetermining the transaction's ability to withstand stress-case scenarios commensurate with theassigned preliminary ratings.

Table 6

Ford Credit Floorplan Master Owner Trust A Loss Experience


2019 2018 2018 2017 2016 2015 2014 2013 2012 2011

Avg. principal balance(mil. $)

20,242 19,845 19,259 19,514 20,226 17,330 17,033 15,783 12,780 11,266

Net losses (mil. $) 0 0 0 0 0 0 0 0 0 0

Net losses/avg. principalbalance (%)

0 0 0 0 0 0 0 0 0 0

Cash Flow Modeling Assumptions

We view the ICR on the manufacturer as a differentiating factor affecting the credit quality of apool of non-diversified ADFP loans. Ford is currently rated BBB/Negative/A-2. For a manufacturerrated in the 'BBB' category, typical ranges for our stressed default-to-liquidation (DTL) andloss-given default (LGD) ratios are shown in table 7.

Loss assumptions

To determine our cash flow stresses for this pool's DTL and LGD, we started with base stressassumptions for DTL and LGD equal to the approximate midpoint of the base ranges for amanufacturer in the 'BBB' rating category (see columns B and E in table 7). However, we believethe manufacturer ICR may not necessarily capture all of the credit risks associated with anon-diversified ADFP pool. As a result, per our criteria, we can adjust the DTL and LGDassumptions within the ranges shown in columns A and D to recognize certain manufacturer- anddealer base-specific characteristics that we view as most applicable to the related floorplanloans' credit quality. These characteristics include:



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- The dealer base's overall financial strength and the level of dealer concentrations,

- The manufacturer's domestic and global market shares and position,

- The manufacturer's inventory and dealer management practices, and

- The overall quality of the vehicles being produced and the overall product mix of the vehiclessecuring the floorplan loans.

For this transaction, our stressed DTL and LGD assumptions for 'AAA' rated securities are shownin columns C and F. Column G shows the resulting loss-to-liquidation (LTL) rate, based on themodeled DTL and LGD assumptions from columns C and F (LTL is the product of DTL and LGD).Based on the modeled DTL, LGD, and LTL assumptions (columns C, F, and G, respectively) andassuming a 25% payment rate trigger, the resulting cumulative gross default rate wasapproximately 62% for a 'AAA' stress scenario. The weighted average LGD is 36%. Therefore, theoverall 'AAA' stressed cumulative net loss is approximately 22.3% (62% multiplied by 36%). Our'AA+' net loss assumption is approximately 90% of this 'AAA' result.

Table 7

DTL, LGD, And LTL Cash Flow Modeling Assumptions For 'AAA' Rated ABS

Manufacturerissuer creditrating Month

(A)BaseDTL range

(%)

(B)Midpointof base DTL

range (%)(C)Modeled

DTL (%)

(D)BaseLGD range

(%)

(E)Midpointof base LGD

range (%)(F)Modeled

LGD (%)(G)LTL

(%)

BBB 1 44.0-56.0 50.0 50.0 28.0-32.0 30.0 30.3 15.1

BBB 6 66.0-84.0 75.0 75.0 37.5-42.5 40.0 40.3 30.3

DTL--Default-to-liquidation rate. LGD--Loss-given default. LTL--Loss-to-liquidation rate. ABS--Asset-backed securities.

Liquidation rate assumption

We consider the payment rate an important performance variable in dealer floorplan transactions.All else being equal, a higher payment rate means fewer receivables will be exposed to losses inany given month.

The series 2019-4 transaction incorporates a 25.0% three-month average payment rate trigger,which, if breached, causes the required subordinated amount to increase. In our view, the dealers'ability to sell vehicles in their inventory may be severely hampered if the manufacturer files forbankruptcy protection, which may cause payment rates to drop sharply because retail customersmay be more hesitant to purchase the manufacturer's vehicles.

In our 'AAA' and 'AA+' stressed cash flows, we assumed that the pool's liquidation rate would startat 100.0% of the 25.0% or 21.0% payment rate triggers, respectively, as applicable, in the firstmonth of the early amortization period and then follow a straight-line decline to 70.0% of thepayment rate trigger (17.5% or 14.7%, respectively) by month six. The remaining collateral wasassumed to liquidate fully following month six. The monthly liquidation rate equals the monthlydecline in the pool balance (i.e., the sum of the monthly principal collections from performingdealers, recoveries, and net losses, divided by the pool balance as of the beginning of the month).

We also ran additional cash flows to test the ability of the class A and B notes' stepped-up creditenhancement to withstand 'AAA' and 'AA+' stresses. These cash flow runs used stresses identicalto those described above, except that the starting point is the 21.0% payment rate trigger level.



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Yield and coupon stresses

The class A, B, C, and D notes will have fixed interest rates that will be determined on the pricingdate. The receivables bear interest at a variable rate based on the prime rate. We applied stressedyield assumptions derived from historical data and our prime rate interest rate vectors (see "U.S.Interest Rate Assumptions Revised For May 2012 And Thereafter," published April 30, 2012) in our'AAA' and 'AA+' rating scenarios to stress the interest rate risk inherent in this transaction.

Top dealer concentrations

Our criteria address the risk of one or more large dealer defaults by setting a credit enhancementfloor for investment-grade non-diversified ADFP asset-backed securities (ABS) that couldwithstand the default of a percentage of the largest dealers (based on the concentration limits inthe transaction documents), assuming that the trust has limited or no access to the underlyingcollateral (see table 8).

Table 8

Dealer Concentration Limits

Dealer rank (by principal receivables) Concentration limit (%)(i)

1 5.0(ii)

All other dealers 2.0

(i)Equals the maximum principal amount of a dealer's receivables (as a percentage of the total pool balance) that can be included in theborrowing base. (ii)AutoNation Inc.

The credit enhancement floor based on dealer concentrations for 'AAA' rated non-diversified ADFPABS equals the greater of:

- 100.00% of the top dealer's concentration (5.00% in this transaction: 100.00% multiplied by5.00%);

- 33.00% of the top five dealers (4.29% in this transaction: 33.00% multiplied by 13.00%); and

- 25.00% of the top 10 dealers (5.75% in this transaction: 25.00% multiplied by 23.00%).

All investment-grade non-diversified ADFP ABS should cover a default by the top dealer (in thiscase 5.00%). The top five and 10 dealer concentrations for the 'AA+' rating scenario areapproximately 90% of the applicable 'AAA' concentration percentages (in this case 3.86% for thetop five dealers and 5.18% for the top 10 dealers). Thus, the credit enhancement available to eachof the class A and B notes in this transaction exceeds the dealer concentration floor for the 'AAAand 'AA+' rating scenarios, respectively.

Sensitivity Analysis

Our ratings incorporate credit stability as one of several factors that we use to determine anissuer's or an issue's creditworthiness (see "Methodology: Credit Stability Criteria," published May3, 2010). For example, based on our rating stability definition, assigning an 'AAA' or 'AA' rating to anew class of dealer floorplan receivables-backed notes signifies that we do not expect the ratingson the notes to fall more than one rating category within 12 months of the rating assignmentunder moderate stress conditions.



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To test whether the preliminary 'AAA (sf)' and 'AA+ (sf)' ratings we assigned to the series 2019-4class A and B notes, respectively, would be vulnerable to a downgrade of more than one category,we analyzed the potential changes in the manufacturer's ICR, specifically a two-categorydowngrade to 'B' because it is one of the two main factors in determining the base cumulative losslevels. The second major factor, the payment rate trigger, is defined in the transaction documents.

In our sensitivity analysis, we adjusted our DTL, LGD, and LTL modeling assumptions to within thebase-level ranges for a 'B' rated manufacturer. We also made the maximum qualitativeadjustments to the base levels, consistent with our criteria, to determine our assumption for eachwithin the base-level range. We then applied 80% and 70% factors to the 'AAA' assumptions toarrive at our 'AA' and 'A+' assumptions, respectively.

Related Criteria

- Criteria | Structured Finance | Legal: U.S. Structured Finance Asset Isolation AndSpecial-Purpose Entity Criteria, May 15, 2019

- Criteria | Structured Finance | General: Incorporating Sovereign Risk In Rating StructuredFinance Securities: Methodology And Assumptions, Jan. 30, 2019

- Criteria | Structured Finance | General: Methodology: Criteria For Global Structured FinanceTransactions Subject To A Change In Payment Priorities Or Sale Of Collateral Upon ANonmonetary EOD, March 2, 2015

- Criteria | Structured Finance | ABS: Global Non-Diversified Auto Dealer Floorplan RatingMethodology And Assumptions, Feb. 5, 2015

- Criteria - Structured Finance - General: Criteria Methodology Applied To Fees, Expenses, AndIndemnifications, July 12, 2012

- General Criteria: Global Investment Criteria For Temporary Investments In TransactionAccounts, May 31, 2012

- Criteria | Structured Finance | RMBS: U.S. Interest Rate Assumptions Revised For May 2012 AndThereafter, April 30, 2012

- Criteria | Structured Finance | General: Methodology For Servicer Risk Assessment, May 28,2009

Related Research

- Despite Ford Motor Co.'s Ongoing Progress On Global Turnaround Efforts, Downgrade RiskPersists, July 26, 2019

- Request For Comment: Methodology To Derive Stressed Interest Rates In Structured Finance,April 16, 2019

- Ford Motor Co., Nov. 28, 2018

- Ford Motor Co.'s Outlook Revised To Negative On Weaker-Than-Expected Profitability, July 27,2018

- Thirty-Three Ratings Affirmed On 15 Ford Credit Floorplan Master Owner Trust A Transactions,Jan. 23, 2018

- Global Structured Finance Scenario And Sensitivity Analysis 2016: The Effects Of The Top Five



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Macroeconomic Factors, Dec. 16, 2016

- What Differentiates S&P Global Ratings' Approach To Rating Diversified Versus Non-DiversifiedFloorplan ABS?, June 20, 2016

In addition to the criteria specific to this type of security (listed above), the following criteriaarticles, which are generally applicable to all ratings, may have affected this rating action:"Counterparty Risk Framework: Methodology And Assumptions," March 8, 2019; "Post-DefaultRatings Methodology: When Does Standard & Poor's Raise A Rating From 'D' Or 'SD'?," March 23,2015; "Global Framework For Assessing Operational Risk In Structured Finance Transactions,"Oct. 9, 2014; "Methodology: Timeliness of Payments: Grace Periods, Guarantees, And Use of 'D'And 'SD' Ratings," Oct. 24, 2013; "Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings,"Oct. 1, 2012; "Methodology: Credit Stability Criteria," May 3, 2010; and "Use of CreditWatch AndOutlooks," Sept. 14, 2009.



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Standard & Poor’s | Research | September 12, 2019 17

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Ford Credit Floorplan Master Owner Trust A (Series 2019-4)

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