Fitch Ratings assigns the following ratings to the Volvo Financial Equipment LLC, Series 2016-1 (VFET 2016-1) notes:

--$186,000,000 class A-1 'F1+sf';

--$186,000,000 class A-2 'AAAsf'; Outlook Stable;

--$186,000,000 class A-3 'AAAsf'; Outlook Stable;

--$65,560,000 class A-4 'AAAsf'; Outlook Stable;

--$18,620,000 class B 'AAsf'; Outlook Stable;

--$20,700,000 class B 'Asf'; Outlook Stable;

--$26,904,485 certificates 'NR'.

Fitch's stress and rating sensitivity analysis are discussed in the presale report titled 'Volvo Financial Equipment LLC, Series 2016-1', dated Jan. 13, 2016, which is available on Fitch's web site. The presale report details how Fitch addresses the key rating drivers summarized below.

KEY RATING DRIVERS

Consistent Collateral: The 2016-1 pool consists of 83.86% trucking collateral and 16.14% of CO collateral. Of the pool, 13.04% is composed of dealer term loans (DTLs), which have not experienced credit defaults on the managed portfolio or prior securitizations.

Improved Managed Portfolio Performance: VFS's managed transportation portfolio experienced asset deterioration from 2007-2009. However, performance between 2010 and third quarter 2015 exhibited improvement in delinquencies and losses.

Strong Securitization Performance: The prior transactions have been performing well. Forecasts of cumulative net losses (CNL) on the outstanding securitizations are extrapolating below 1.00%.

Sufficient Credit Enhancement: Hard credit enhancement (CE) is 10.35%, 7.65% and 4.65% for the class A, B and C notes, respectively. Additionally, the notes benefit from excess spread, expected to be 2.13% per annum. CE levels are sufficient for the ratings under Fitch's 2.45% CNL proxy.

Stable Origination, Underwriting and Servicing Platform: VFS has demonstrated sufficient abilities as originator, underwriter and servicer, as evidenced by historical delinquency and loss performance of securitized trusts and the managed portfolio.

Integrity of Legal Structure: The legal structure of the transaction should provide that a bankruptcy of the trust would not impair the timeliness of payments on the securities.

RATING SENSITIVITIES

Unanticipated increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than the base case and could result in potential rating actions on the notes. Fitch evaluated the sensitivity of the ratings assigned to VFET 2016-1 to increased CNLs over the life of the transaction. Fitch's analysis found that the transaction displays some sensitivity to increased defaults and CNL, showing a potential downgrade of one category under Fitch's moderate (1.5x base case loss) scenario. The notes could experience downgrades of up to three rating categories, although still remain investment grade, under Fitch's severe (2.5x base case loss) scenario.

DUE DILIGENCE USAGE

Fitch was provided with third-party due diligence information from Pricewaterhouse Coopers LLP. The third-party due diligence focused on comparing certain attributes with respect to 160 assets. Fitch considered this information in its analysis, and the findings did not have an impact on our analysis. A copy of the ABS Due Diligence Form-15E received by Fitch in connection with this transaction may be obtained through the link contained on the bottom of the related rating action commentary.

Key Rating Drivers and Rating Sensitivities are further described in the presale report dated Jan. 13, 2016. Fitch's analysis of the Representations and Warranties (R&W) of this transaction can be found in 'Volvo Financial Equipment LLC, Series 2016-1 - Appendix'. These R&Ws are compared to those of typical R&W for the asset class as detailed in the special report 'Representations, Warranties, and Enforcement Mechanisms in Global Structured Finance Transactions' dated June 12, 2015.

Key Rating Drivers and Rating Sensitivities are further described in the accompanying presale report, available at 'www.fitchratings.com' or by clicking on the link.

Additional information is available at www.fitchratings.com.

Applicable Criteria

Criteria for Rating U.S. Equipment Lease and Loan ABS (pub. 03 Dec 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874138

Global Structured Finance Rating Criteria (pub. 06 Jul 2015)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952

Related Research

Volvo Financial Equipment LLC, 2016-1 -- Appendix

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=876575

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=998541

ABS Due Diligence Form 15E 1

https://www.fitchratings.com/creditdesk/press_releases/content/ridf15E_frame.cfm?pr_id=998541&flm_nm=15e_998541_1.pdf

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=998541

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

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