Hyundai Auto Lease Securitization Trust 2020-A

Presale: Hyundai Auto Lease Securitization Trust 2020-A

January 8, 2020

PRIMARY CREDIT ANALYST

Preliminary Ratings Timothy J Moran, CFA, FRM New York Preliminary amount Legal final (1) 212-438-2440 Class(i) Preliminary rating Type Interest rate(ii) (mil. $) maturity timothy.moran A-1 A-1+ (sf) Senior Fixed 132.60 Jan. 15, 2021 @spglobal.com

A-2 AAA (sf) Senior Fixed 321.85 May 16, 2022 SECONDARY CONTACT

A-3 AAA (sf) Senior Fixed 321.85 July 17, 2023 Steve D Martinez New York A-4 AAA (sf) Senior Fixed 71.53 Dec. 15, 2023 (1) 212-438-2881 B AA+ (sf) Subordinate Fixed 45.97 May 15, 2024 steve.martinez @spglobal.com Note: This presale report is based on information as of Jan. 8, 2020. The ratings shown are preliminary. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. Accordingly, the preliminary ratings should not be construed as evidence of final ratings. This report does not constitute a recommendation to buy, hold, or sell securities. (i)All or a portion of one or more classes of notes may be initially retained by the sponsor Hyundai Capital America or its affiliate. (ii)The actual coupons of these tranches will be determined on the pricing date.

Profile

Expected closing date Jan. 22, 2020.

Collateral Prime auto lease receivables.

Origination trust Hyundai Lease Titling Trust.

Issuer Hyundai Auto Lease Securitization Trust 2020-A.

Sponsor, servicer, and administrator Hyundai Capital America Inc. (BBB+/Stable/A-2).

Depositor Hyundai HK Lease LLC.

Indenture trustee U.S. Bank N.A. (AA-/Stable/A-1+).

Owner trustee Wilmington Trust N.A. (A/Stable/A-1).

UTI, SUBI, Delaware, origination, and administrative trustee U.S. Bank Trust N.A.

Lead underwriter Barclays Capital Inc. (A/Stable/A-1)

UTI--Undivided trust interest. SUBI--Special unit of beneficial interest.

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Credit Enhancement Summary(i)

Hyundai Auto Lease Securitization Trust

2020-A 2019-B 2019-A 2018-B 2018-A

Rating

Class A AAA (sf) AAA (sf) AAA (sf) AAA (sf) AAA (sf)

Class B AA+ (sf) AA+ (sf) AA+ (sf) AA+ (sf) AA+ (sf)

Subordination (%)

Class A 4.50 4.50 4.50 4.50 4.50

Class B N/A N/A N/A N/A N/A

Overcollateralization (%)

Initial 12.50 12.50 12.50 12.50 12.50

Target 13.50 13.50 13.50 14.50 14.50

Step-down target after 13.50 13.50 13.50 13.50 13.50 class A-2 payout

Reserve account (%)

Initial 0.50 0.50 0.50 0.50 0.50

Target 0.50 0.50 0.50 0.50 0.50

Total initial hard credit enhancement (%)

Class A 17.50 17.50 17.50 17.50 17.50

Class B 13.00 13.00 13.00 13.00 13.00

Total target hard credit enhancement (%)

Class A 18.50 18.50 18.50 19.50 19.50

Class B 14.00 14.00 14.00 15.00 15.00

Total step-down target hard credit enhancement after class A-2 payout (%)

Class A 18.50 18.50 18.50 18.50 18.50

Class B 14.00 14.00 14.00 14.00 14.00

Estimated excess spread per 3.70 3.63 3.50 3.78 3.87 year (%)(ii)

Discount rate (%) 7.00 7.15 7.90 7.90 7.50

Total securities issued ($) 893,796,000 926,226,000 710,570,000 707,860,000 904,200,000

Initial aggregate 1,021,482,211 1,058,544,313 812,087,923 808,988,467 1,033,368,258 securitization value ($)

(i)All percentages are based on the initial aggregate securitization value. (ii)Reflects estimated annual excess spread at the preliminary ratings and does not reflect final pricing. N/A--Not applicable.

Rationale

The preliminary ratings assigned to Hyundai Auto Lease Securitization Trust 2020-A's (HALST 2020-A's) auto lease asset-backed notes series 2020-A reflect our view of:

- The availability of approximately 23.6% and 19.1% credit enhancement for the class A and B notes, respectively, in the form of 4.50% subordination to the class A notes; 12.50%

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overcollateralization, which will build to a target of 13.50% of the initial securitization value; a 0.50% nonamortizing reserve account; and excess spread (all percentages are measured in terms of the pool's initial aggregate securitization value).

- The credit quality of the underlying collateral, which comprises prime auto lease receivables that have a weighted average FICO score of 752.

- Our expectation that under a moderate 'BBB' stress scenario, all else being equal, our preliminary ratings on the class A notes would not likely be lowered, and the preliminary rating on the class B notes would not likely be lowered more than one rating category for the transaction's life. Our expectation for the class A notes exceeds our ratings stability criteria, which state that 'AAA' and 'AA' ratings will remain within one rating category for the first year, under moderate stress conditions. Our expectation for the class B notes is in line with our criteria (see "Methodology: Credit Stability Criteria," published May 3, 2010).

- The diversified mix of vehicle models in the pool.

- The relatively even distribution of the expected residuals' maturities.

- Automotive Lease Guide's (ALG's) forecast of each vehicle's lease-inception and current residual value.

- The timely interest and full principal payments by the notes' legal final maturity dates made under cash flow scenarios that were stressed for credit and residual losses and are consistent with the assigned preliminary ratings.

- The transaction's payment and legal structures.

Our expected credit loss for the HALST 2020-A pool is 0.90% of the securitization value, which reflects the performance of the outstanding HALST transactions, the static pool loss projections for Hyundai Capital America Inc.'s (HCA's) lease originations, the performance on the managed portfolio, collateral comparisons with peers, and our forward-looking view of the economy, namely our expectation for lower used vehicle values (see the Collateral Analysis section below for more information). Our 'AAA' stress scenario for credit loss is 4.50% of the securitization value, and our 'AA+' stress is 4.05%.

Our 'AAA' and 'AA+' residual stress for the HALST 2020-A pool is 27.28% and 24.13%, respectively, of the pool's aggregate undiscounted base residual value. After applying this stress to the residual value portion of the pool (63.13%) and the nondefaulting leases (91.00% under the 'AAA' stress and 91.90% under the 'AA+' stress), our 'AAA' and 'AA+' residual stress constitutes 15.67% and 13.65%, respectively, of the pool's aggregate securitization value.

One of the main considerations in our analysis to derive our haircuts was a comparison of the HALST 2020-A base residual value with the historical auction proceeds data, which the issuer provided. In addition, we incorporated an analysis of the residual maturity schedule, vehicle model composition, and our views on the used-vehicle market.

Our total stressed losses (credit and residual) are approximately 20.17% and 17.70% for the 'AAA' and 'AA+' rated notes, respectively, as a percentage of the initial aggregate securitization value. In our view, the credit enhancement outlined above and in the Cash Flow Modeling section below provide more than adequate support for our assigned preliminary ratings.

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Changes from HALST 2019-B

The structural and credit enhancement changes from HALST 2019-B include the following:

- The discount rate decreased to 7.00% from 7.15%.

- The estimated annual excess spread before pricing increased to approximately 3.70% from 3.63%.

The collateral changes from the prior transaction are as follows:

- The base residual as a percentage of securitization value increased to 63.13% from 61.74%.

- The percentage of leases with an original term of 37-42 months decreased to 1.38% from 8.95%, while the percentage of leases with an original term of 43-48 months increased to 26.93% from 19.40%.

- The top five vehicles are the Tucson, Santa Fe, Sportage, Sonata, and Sorento and aggregate to approximately 51.34% of the pool as a percentage of securitization value which is lower than the series 2019-B pool's 56.71%.

- Genesis-branded vehicles are included for the fourth time, and they comprise 2.98% of the pool's securitization value, down from 3.43% for the series 2019-B pool. The Genesis-branded vehicles in the 2019-B pool are the G70, G80, and G90 models.

- The percentage of cars decreased to 37.73% from 40.59%, while the percentage of SUVs/crossovers increased to 58.16% from 55.57%.

- The Kia Telluride SUV is included in the collateral pool for the second time (6.44% of securitization value versus 0.63%), while the Hyundai Palisade SUV (1.75% of securitization value) is included for the first time.

Transaction Overview

The series 2020-A transaction will be HCA's 19th auto lease transaction overall and the first in 2020. HCA has also issued numerous prior auto loan transactions. The series 2020-A transaction is structured similarly to HCA's previous transactions and to other lease securitizations with nonamortizing target credit enhancement. The pool's structure incorporates an initial reserve amount equal to 0.50% of the initial securitization value and a 12.50% overcollateralization amount, which builds to a target of 13.50% of the initial securitization value. The series 2020-A pool's estimated excess spread is approximately 3.70% per year. The transaction uses a sequential-pay method in which it can't release hard credit support until all the rated notes are paid in full. Excess spread, however, can be released as long as the overcollateralization is at its target level.

The series 2020-A pool will securitize mainly 36-month leases (70.82%) and 48-month leases (26.93%) originated by HCA. The monthly lease payments and lease residual values will serve as the notes' collateral. The securitized pool comprises 10 Hyundai models, 12 Kia models, and three Genesis models, and will consist primarily of 2018, 2019, and 2020 model vehicles.

All of the leased vehicles included in the transaction will be titled in the origination trust's name--Hyundai Lease Titling Trust, a Delaware statutory trust created in November 2005. The origination trust will issue a transaction special unit of beneficial interest (SUBI) certificate, which represents a beneficial interest in the origination trust that relates solely to the specified auto

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lease receivables and related residual values that are dedicated to repaying the SUBI and, ultimately, the rated notes. HALST 2020-A will own the rights, title, and interest to the SUBI certificate and will pledge the SUBI certificate to the indenture trustee for the noteholders' benefit.

Legal Structure

On the closing date, HCA will sell, transfer, and assign the transaction's SUBI certificate to Hyundai HK Lease LLC (the depositor) as a true sale. The depositor will then transfer and assign the SUBI certificate to HALST 2020-A (the issuing entity), a newly formed Delaware statutory trust. The issuing entity will pledge the SUBI certificate to the indenture trustee as security for the class A and B notes, each of which will represent an obligation of the issuing entity (see chart 1 for the transaction structure).

Pension Benefit Guaranty Corp. (PBGC) can file a lien against the assets of any member of Hyundai's controlled group if minimum contribution payments to Hyundai's defined benefit pension plan are not paid as required by law, or if Hyundai terminates an underfunded defined

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benefit pension plan. As a member of the controlled group, HCA's assets could be subject to any PBGC lien (including those leases and vehicles designated to the SUBI, which serve as the source of payments on the issued notes) if Hyundai's minimum contribution payments are not made or if Hyundai terminates an underfunded defined benefit plan. In our view, the risk of a PBGC lien on the leases and residuals assigned to the SUBI, which is pledged to the notes, is mitigated by the relatively small size of the pension plan relative to the origination trust assets, as well as the company's historical ability to keep the plan funded at the appropriate levels.

Payment Structure

On each payment date, distributions will be made from available funds according to the payment priority shown in table 1. Principal will be paid on the notes sequentially.

Table 1

Payment Waterfall

Priority Payment

1 Advance reimbursements to the servicer.

2 Pro rata, the 1.00% servicing fee to the servicer and the $5,000 per collection period administration fee to the administrator.

3 Note interest, pro rata, to the class A noteholders.

4 The first priority principal distribution amount, paid sequentially (if the class A notes' balance, as of the preceding payment date, is greater than the aggregate securitization value at the end of the related collection period) to the noteholders.

5 Note interest to the class B noteholders.

6 The second priority principal distribution amount, paid sequentially (if the class A and B notes' balance, as of the preceding payment date, is greater than the aggregate securitization value at the end of the related collection period) to the noteholders.

7 To the reserve account, until it reaches the required amount.

8 The regular principal distribution amount, sequentially, to the noteholders(i).

9 Pro rata, to the indenture trustee, the origination trustee, or the owner trustee, any amounts due according to the transaction documents.

10 Any excess amounts to the certificateholder.

(i)The regular principal distribution amount is designed to build the initial overcollateralization level to 13.50% of the initial securitization value target. All of the required payments on the notes will be due and payable on each payment date (the 15th of each month or the next business day, beginning Feb. 18, 2020).

On each payment date after note acceleration following an event of default, the indenture trustee will distribute the available funds according to the payment priority shown in table 2.

Table 2

Event Of Default Payment Waterfall

Priority Payment

1 Pro rata, to the indenture, origination, and owner trustees, for any accrued and unpaid fees, expenses, and indemnity payments under the indenture, the origination trust agreement, or the trust agreement as applicable, provided that aggregate expenses payable to the indenture, origination, and owner trustees under this item are limited to $500,000 per year in the aggregate.

2 Advance reimbursements to the servicer.

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Table 2

Event Of Default Payment Waterfall (cont.)

Priority Payment

3 Pro rata, the 1.00% servicing fee to the servicer and the $5,000 per collection period administration fee to the administrator.

4 Note interest, pro rata, to the class A noteholders.

5 If an indenture default has occurred from a payment or bankruptcy default, then the following priority will apply: first, principal to the class A-1 noteholders until paid in full; then principal, pro rata, to the class A-2, A-3, and A-4 noteholders until paid in full; then interest to the class B noteholders; and then principal to the class B noteholders until paid in full.

6 If an indenture default has occurred from a breach of a representation, warranty, or covenant, then the following priority will apply: first, interest to the class B noteholders; then principal to the class A-1 noteholders until paid in full; then principal, pro rata, to the class A-2, A-3, and A-4 noteholders until paid in full; and then principal to the class B noteholders until paid in full.

7 To the indenture trustee, the origination trustee, or the owner trustee for any accrued and unpaid fees, expenses, and indemnity payments.

8 Any excess amounts to the certificateholder.

Residual Value

The notes issued to finance the HALST 2020-A pool will be secured by leases with an aggregate securitization value of $1,021,482,211. The leases' securitization value is the sum of the present value of each lease's remaining monthly payments and the present value of the leased vehicle's base residual value (both discounted at 7.00%). Each leased vehicle's base residual value will equal the least of the stated residual value set by HCA at the lease's inception, the maximum residualized manufacturer's suggested retail price (MRM) residual value estimate established by the ALG at the lease's inception, and the maximum ALG's refreshed MRM residual value estimate from its September-October 2019 edition. The MRM is an ALG adjustment that effectively caps the value of certain vehicle extras and optional equipment.

HCA's stated residual value is the residual value of each vehicle assigned at the leases' inceptions--as stated in the lease contract--that determines the monthly payments for the individual leases. The stated residual values are typically set higher than the ALG residual value to reduce the lease payments that the lessees owe under the lease contracts (a process called lease subvention). Therefore, the definition of the securitization's base residual value provides a more conservative estimate of each vehicle's future value and helps to mitigate noteholders' exposure to losses associated with lease subvention. The undiscounted base residual is $644,843,490, or 63.13% of the HALST 2020-A pool's securitization value.

Managed Portfolio

The managed portfolio saw substantial growth from 2010 to 2017, as a result of Hyundai's large market-share growth. As of Sept. 30, 2019, Hyundai's total serviced lease portfolio comprised 816,838 contracts totaling $15.94 billion, down from 842,375 contracts totaling $16.69 billion as of Sept. 30, 2018. As of Sept. 30, 2019, total delinquencies increased to 1.52% from 1.29% a year earlier. Annualized net losses, as a percentage of the average dollar amount of lease contracts outstanding, decreased to 0.58% for the nine months ended Sept. 30, 2019, from 0.66% a year earlier, despite a decreasing portfolio size.

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Table 3

Total Managed Portfolio

Nine months ended Sept. 30 Year ended Dec. 31

2019 2018 2018 2017 2016 2015 2014 2013

Lease contracts 15,947.57 16,693.49 16,466.80 17,426.01 16,323.65 14,364.43 12,063.99 9,923.38 outstanding (mil. $)

Avg. dollar amount 16,219.71 17,290.09 17,217.73 16,761.42 14,896.78 12,684.78 10,537.04 8,076.06 of leases outstanding (mil. $)

No. of contracts 816,838 842,375 844,606 856,274 786,397 705,512 605,545 510,997 outstanding

30-plus-day 1.52 1.29 1.55 1.51 1.51 1.37 1.25 1.22 delinquencies (%)(i)

No. of 0.64 0.81 0.78 0.77 0.62 0.56 0.55 0.36 repossessions (%)(ii)

Net losses (%)(iii) 0.58 0.66 0.65 0.61 0.56 0.36 0.33 0.27

Vehicles returned 41 38 40 35 34 29 21 14 to HCA (%)(iv)

Total gain (or loss) 0.002 (2.09) (1.92) (7.00) (7.22) (7.67) (1.00) 2.91 on ALG residuals on vehicles returned to HCA (%)(v)

(i)As a percent of the number of contracts outstanding. (ii)As a percent of the average number of lease contracts outstanding. (iii)As a percent of average dollar amount of leases outstanding. Annualized. (iv)As a percent of the number of vehicles scheduled to terminate. (v)As a percent of ALG's residual value of returned vehicles sold by HCA. HCA--Hyundai Capital America. ALG--Automotive Lease Guide.

As of Sept. 30, 2019, Hyundai's total serviced lease portfolio reported residual gain on returned vehicles that equaled 0.002% of the vehicles' ALG forecast residual values, compared with residual losses of 2.09% a year prior.

After three years of low-teens return rates from 2011 to 2013, return rates started to inch up as vehicle supply grew and consumers increasingly turned to larger, less fuel-efficient vehicles; return rates were 41% for Sept. 30, 2019. Hyundai does not count a purchase of the underlying vehicle by the grounding dealer as a return, which results in return rates that appear to be lower than those of peers.

The dollar amount of average outstanding lease contracts in the Kia portfolio decreased approximately 5% as of Sept. 30, 2019, compared with the same period a year earlier; and the outstanding dollar amount of the Hyundai portfolio decreased approximately 7% over the same period. The decrease in portfolio reflects origination volume and overall sales in the U.S. due to market competition. The company has been taking measures to improve its product mix and inventory management.

The delinquency and net loss percentages for the Hyundai- and Kia-managed portions of the total lease portfolio are shown in tables 4 and 5, respectively. The Hyundai-managed portion exhibited a 22 basis points increase in total delinquencies as of Sept. 30, 2019, compared with a year earlier, while the Kia-managed portion exhibited a 23 basis points increase. The number of repossessions as a percentage of the average number of lease contracts outstanding decreased over the same period. Hyundai's and Kia's annualized net losses decreased by eight basis points, respectively, for the nine months ended Sept. 30, 2019, compared with the same period in 2018,

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despite a decreasing portfolio size.

The HALST 2020-A's collateral pool is split equally between Hyundai and Kia vehicles and include approximately 3% of Genesis-branded vehicles.

Table 4

Hyundai Managed Portfolio

Nine months ended Sept. 30 Year ended Dec. 31

2019 2018 2018 2017 2016 2015 2014 2013

Lease contracts 8,225.97 8,841.94 8,683.40 9,268.63 8,814.66 7,695.45 6,734.96 6,061.41 outstanding (mil. $)

Avg. dollar amount of 8,473.75 9,123.24 9,086.86 9,041.64 7,956.42 7,010.60 6,261.74 5,189.37 leases outstanding (mil. $)

No. of contracts 429,507 449,516 449,247 457,629 426,085 382,188 340,058 312,519 outstanding

30-plus-day 1.19 0.96 1.24 1.16 1.14 1.27 1.22 1.18 delinquencies (%)(i)

No. of repossessions 0.49 0.59 0.57 0.58 0.49 0.51 0.54 0.36 (%)(ii)

Net losses (%)(iii) 0.41 0.49 0.47 0.44 0.42 0.30 0.32 0.28

Vehicles returned to 44 44 46 38 36 38 28 18 HCA (%)(iv)

Total gain (or loss) on (0.94) (3.64) (3.13) (9.07) (9.10) (10.44) (2.12) 1.19 ALG residuals on vehicles returned to HCA(%)(v)

Table 5

Kia Managed Portfolio

Nine months ended Sept. 30 Year ended Dec. 31

2019 2018 2018 2017 2016 2015 2014 2013

Lease contracts 7,721.60 7,851.56 7,783.40 8,157.38 7,508.99 6,668.98 5,329.04 3,861.97 outstanding (mil. $)

Avg. dollar amount of 7,745.97 8,166.85 8,130.87 7,719.78 6,940.36 5,674.18 4,275.31 2,886.69 leases outstanding (mil. $)

No. of contracts 387,331 392,859 395,359 398,645 360,312 323,324 265,487 198,478 outstanding

30-plus-day 1.89 1.66 1.90 1.91 1.96 1.49 1.29 1.28 delinquencies (%)(i)

No. of repossessions 0.81 1.06 1.01 1.00 0.78 0.64 0.56 0.35 (%)(ii)

Net losses (%)(iii) 0.76 0.84 0.84 0.81 0.74 0.44 0.36 0.25

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Table 5

Kia Managed Portfolio (cont.)

Vehicles returned to 38 32 33 31 31 18 8 6 HCA (%)(iv)

Total gain (or loss) on 1.17 0.54 0.32 (3.80) (4.21) 0.80 7.64 16.20 ALG residuals on vehicles returned to HCA (%)(v)

(i)As a percent of number of contracts outstanding. (ii)As a percent of the average number of lease contracts outstanding. (iii)As a percent of average dollar amount of leases outstanding. Annualized. (iv)As a percent of the number of vehicles scheduled to terminate. (v)As a percent of ALG's residual value of returned vehicles sold by HCA. HCA--Hyundai Capital America. ALG--Automotive Lease Guide.

Securitization/Surveillance Performance

We maintain current ratings on six active Hyundai Auto Lease Securitization Trust transactions that closed between 2017 and 2019 (see table 6 and chart 3). Due to current system limitations, Hyundai may report some early terminations occurring at the end of any given month as a credit loss even if they are subsequently determined not to be a default. Any resulting residual gains or losses on such vehicles will, therefore, flow through on the credit rather than the residual side, which can distort a securitization's cumulative net loss picture. However, we believe that our credit loss expectations for these deals remain conservative. Each transaction remains adequately enhanced at this time. We will continue to monitor their performance to determine if the assigned ratings are sufficient and if any rating actions are deemed appropriate.

Chart 2

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Table 6

Performance Data For Outstanding Hyundai Auto Lease Securitization Trust Transactions(i)

Cumulative net residual Initial Revised Pool losses/(gains) as a % of expected expected Factor Credit aggregate initial lifetime credit lifetime credit Transaction/series Month (%) CNL(%) securitization value CNL (%) CNL (%)(ii)

2017-B 31 21.23 (0.06) (1.63) 1.10-1.30 0.60(iii)

2017-C 25 34.93 (0.47) (2.83) 1.10-1.30 N/A

2018-A 22 50.05 (0.47) (2.73) 1.15 N/A

2018-B 18 63.56 0.02 (0.74) 1.15 N/A

2019-A 10 82.21 0.01 0.00 1.00 N/A

2019-B 4 92.05 0.01 0.00 1.00 N/A

(i)As of the December 2019 distribution date. (ii)As of December 2019. (iii)Revised in March 2019. CNL--Cumulative net loss. N/A--Not applicable.

Chart 3

In terms of residual performance, the paid-off securitizations experienced residual gains as a percentage of the initial securitization value, and the outstanding series are generally reporting residual gains on the outstanding series pools (see chart 4).

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Chart 4

Collateral Analysis

The HALST 2020-A securitized pool comprises 53,957 prime auto lease receivables (see table 7). Hyundai and Kia vehicles account for approximately 48.5% of the pool's securitization value each, with Genesis branded vehicles accounting for approximately 3%. The top five models (Tucson, Santa Fe, Sportage, Sonata, and Sorento) account for approximately 51% of the securitization value, with the remaining 43% of the pool comprising seven other Hyundai, 10 Kia, and three Genesis models. The pool consists primarily of leases with 36-month original terms (71%) and 48-month original terms (27%). Cars accounted for approximately 38% of the pool and crossover/SUVs accounted for approximately 58% of the pool. The pool's weighted average FICO score is 752, and approximately 48% of the obligors in the securitized pool have FICO scores of 750 and higher (see table 7).

Table 7

HALST Original Pool Characteristics

Hyundai Auto Lease Securitization Trust

2020-A 2019-B 2019-A 2018-B 2018-A 2017-C 2017-B 2017-A

No. of leases 53,957 59,924 43,583 42,931 57,131 54,650 56,419 62,371

MSRP ($) 1,523,489,250 1,675,987,530 1,194,907,441 1,202,779,045 1,543,594,780 1,471,435,620 1,556,712,115 1,747,728,807

Book value ($)(i) 1,349,125,043 1,458,910,453 1,063,733,086 1,073,914,396 1,407,041,211 1,375,897,594 1,449,743,923 1,639,640,394

Securitization value 1,021,482,211 1,058,544,313 812,087,923 808,988,467 1,033,368,258 1,017,871,804 1,117,582,350 1,272,141,426 ($)

Avg. securitization 18,931 17,665 18,633 18,844 18,088 18,625 19,809 20,396 value ($)

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Table 7

HALST Original Pool Characteristics (cont.)

Hyundai Auto Lease Securitization Trust

2020-A 2019-B 2019-A 2018-B 2018-A 2017-C 2017-B 2017-A

Securitization 7.00 7.15 7.90 7.90 7.50 7.10 7.00 6.90 (discount) rate (%)

Base residual value 644,843,490 653,533,802 517,915,596 521,088,564 661,257,043 667,245,345 745,124,106 837,295,523 (undiscounted) ($)

Avg. base residual 11,951 10,906 11,883 12,138 11,574 12,209 13,207 13,424 value ($)

Base residual as a % 63.13 61.74 63.78 64.41 63.99 65.55 66.67 65.82 of the aggregate securitization value

Base residual as a % 42.33 38.99 43.34 43.32 42.84 45.35 47.87 47.91 of the MSRP

Weighted avg. original 39.17 38.5 39.9 38.9 38.9 39.5 39.4 39.9 term (mos.)(ii)

Weighted avg. 28.70 27.4 29.5 30.3 30.2 29.0 30.4 30.9 remaining term (mos.)(ii)

Weighted avg. 10.48 11.1 10.4 8.6 8.6 10.6 9.0 9.0 seasoning (mos.)(ii)(iii)

Original term (%)

24 months 0.86 0.61 0.46 1.67 3.04 2.42 2.07 3.14

25-36 months 70.82 71.04 65.43 72.40 68.47 61.30 58.18 60.47

37-42 months 1.38 8.95 1.29 0.05 2.19 6.02 12.97 1.57

43-48 months 26.93 19.40 32.82 25.87 26.31 30.25 26.78 34.82

Weighted avg. FICO 752 750 746 746 746 746 746 744 score(iv)

New vehicles (%) 100 100 100 100 100 100 100 100

Hyundai vehicles (%) 48.53 47.72 50.00 48.12 49.94 48.96 49.75 50.44

Kia vehicles (%) 48.50 48.85 48.37 47.91 50.06 51.04 50.25 49.56

Genesis vehicles (%) 2.98 3.43 1.63 3.97 N/A N/A N/A N/A

Top five vehicles by model (% of securitization value)

Tucson=12.83 Tucson=12.95 Tucson=13.98 Elantra=12.25 Elantra=13.25 Sorento=14.49 Sorento=15.86 Sorento=15.26

Santa Sorento=12.71 Sorento=13.97 Sorento=12.24 Sorento=13.08 Elantra=13.56 Optima=12.97 Sonata=14.13 Fe=10.01

Sportage=9.83 Santa Fe=10.96 Elantra=10.89 Tucson=11.56 Santa Optima=12.84 Sonata=12.48 Optima=13.46 Fe=12.57

Sonata=9.35 Sportage=10.65 Santa Santa Tucson=12.23 Santa Elantra=11.40 Elantra=9.80 Fe=10.62 Fe=11.46 Fe=11.56

Sorento=9.31 Sonata=9.45 Sonata=10.50 Optima=9.77 Optima=11.10 Tucson=11.23 Santa Santa Fe=9.19 Fe=10.38

Total 51.34 56.71 59.95 57.29 62.23 63.68 63.08 61.84

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Table 7

HALST Original Pool Characteristics (cont.)

Hyundai Auto Lease Securitization Trust

2020-A 2019-B 2019-A 2018-B 2018-A 2017-C 2017-B 2017-A

Vehicle type (% of securitization value)

Car(v) 37.73 40.59 43.27 48.86 45.15 45.63 48.58 52.26

CUV/SUV(vi) 58.16 55.57 52.23 45.95 48.77 46.90 44.39 39.85

Minivan/wagon(vii) 4.11 3.84 4.50 5.19 6.08 7.46 7.04 7.89

Top four state concentrations (%)

FL=13.99 FL=14.89 CA=15.10 FL=17.11 CA=16.18 CA=17.14 FL=15.56 CA=16.21

CA=13.92 CA=14.03 FL=14.78 CA=16.35 FL=15.56 NY=13.04 NY=13.87 FL=15.65

NY=13.80 NY=13.67 NY=12.04 NY=11.50 NY=12.34 NJ=9.95 CA=13.73 NY=12.14

NJ=10.20 NJ=9.63 NJ=9.54 NJ=8.41 NJ=8.64 FL=7.65 NJ=9.40 NJ=8.16

Note: All percentages are expressed as a percentage of the securitization value. (i)The book value is determined based on the leases' capitalized amounts minus the related leased vehicles' accumulated depreciation. (ii)Average weighted by the securitization value. (iii)Seasoning refers to the number of months elapsed since the leases' origination. (iv)FICO scores are calculated excluding accounts for which no FICO score is available (approximately 0.55% of the series 2020-A pool as a percentage of the securitization value). (v)For the series 2020-A pool, car includes Accent, Azera, Cadenza, Elantra, Forte, G70, G80, G90, Ioniq, K900, Optima, Rio, Sonata, Stinger, and Veloster. (vi)This includes Kona, Niro, Palisade, Santa Fe, Sorento, Sportage, Telluride, and Tucson. (vii)This includes Sedona and Soul. MSRP--Manufacturer's suggested retail price. N/A--Not applicable.

Collateral Residual Timing

The leases in the HALST 2020-A pool are scheduled to mature as follows (all percentages are expressed as a percentage of the pool's aggregate undiscounted base residual value):

- 0.78% in 2020,

- 37.12% in 2021,

- 42.23% in 2022, and

- 15.72% in 2023.

Leases will mature each month, beginning in December 2020 (see chart 5). The highest base residual maturity level in any one month is 5.38%, which occurs in March 2022. The second highest is 5.07% in April 2022. The highest percentage of base residual maturities in any three-month period is 14.93%, which we expect to occur from March 2022 through May 2022. The majority of the residuals mature two or three years after the closing date. If vehicle values are distressed in 2021 and 2022, there is increased risk that the realized residual values will be lower than the base residuals. We believe this risk is mitigated by the transaction's sequential payment structure, in which the overcollateralization and reserve account target amounts will not amortize until all of the notes are paid in full. In the transaction's zero loss, zero prepay cash flow scenario, approximately 80% of the residuals will have come due by the time the notes are paid in full.

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Chart 5

S&P Global Ratings' Expected Credit And Residual Losses

HALST 2020-A has two principal risk components: credit and residual risk.

Credit risk

The obligor's credit profile determines the credit risk. To derive the base-case credit loss for the series 2020-A transaction, we projected the static pool losses on HCA's lease portfolio originations, segmented by FICO score and lease term. We then weighted the projections by the actual concentration of those various segments in the series 2020-A pool. We also considered the HALST 2020-A pool's collateral credit quality, Hyundai's overall managed pool performance, the performance of outstanding HALST securitizations, and our forward-looking view of the economy. Based on this information, we expect the HALST 2020-A pool's cumulative net credit loss to be 0.90% of the pool's securitization value.

Residual risk

We examined and assessed residual loss on the series 2020-A pool according to our auto lease criteria, "Revised General Methodology and Assumptions for Rating U.S. ABS Auto Lease Securitizations," published Nov. 29, 2011.

In our analysis of the series 2020-A pool's residual risk, we considered the following factors:

- The historical stability of Hyundai's and Kia's used-vehicle values,

- The consistency of the ALG's historical forecasts in relation to the actual historical used-vehicle

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values,

- The basis for the differences between the actual values and the forecasts,

- ALG's basis for its current forecast,

- Brand perception,

- HCA's plans (if any) to discontinue or update the vehicle models in question in the near term, and

- The economy.

Based on these factors, we did not apply any adjustment to the base residual value.

Base haircut

According to our auto lease criteria, we first applied initial 26.00% and 23.00% rating-specific haircuts to the series 2020-A pool's base residual value. This is commensurate with our 'AAA' and 'AA+' rating scenarios, respectively.

Excess concentration haircut

In addition to the aforementioned base haircut, we applied a haircut to the amount of nondefaulted lease residuals exceeding the concentration limits applicable to the benchmark pool (excess concentrations) as outlined in our auto lease criteria. The haircut applied to excess concentrations commensurate with each rating scenario is shown in table 8.

Table 8

Additional Excess Concentration Haircut

Scenario (preliminary rating) AAA (sf) AA+ (sf)

Haircut applied to the excess concentration as a % of undiscounted base 13.0 11.5 residual value

The excess 9.81% concentration results in additional 'AAA' and 'AA+' base residual value haircuts of 1.28% and 1.13%, respectively, bringing the total base residual value haircuts applied to the series 2020-A pool to 27.28% and 24.13% at the 'AAA' and 'AA+' levels (see table 9).

Table 9

Benchmark Pool Excess Concentrations

HALST Benchmark pool concentration 2020-A limit Excess concentration

One-month maturity in excess of benchmark (% of undiscounted base residual)

March 2022 5.38 5.00 0.38

April 2022 5.07 5.00 0.07

August 2022 5.02 5.00 0.02

Individual model (Tucson) (%) 13.50 20.00 --

Full-size and mid-size SUVs, full-size pickups, 27.44 30.00 -- and vans (%)

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Table 9

Benchmark Pool Excess Concentrations (cont.)

HALST Benchmark pool concentration 2020-A limit Excess concentration

Compact and hybrid cars (%) 21.90 30.00 --

New and discontinued models (%) 19.34 10.00 9.34

Total excess concentration (%) -- -- 9.81

HALST--Hyundai Auto Lease Securitization Trust.

Speculative-grade manufacturer haircut

When determining the stress that applies to the adjusted base residual value, we use the auto manufacturer's creditworthiness. Our auto lease criteria apply haircuts to the base residual value of the vehicles produced by manufacturers with speculative-grade issuer credit ratings ('BB+' or below).

Hyundai Motors Co. and Kia Motors Corp. manufacture the leased vehicles backing the HALST 2020-A pool. In September 2017, we affirmed our issuer credit rating (ICR) and revised our rating outlook on Hyundai (and its subsidiary Kia) to negative from stable due to the company's weakening sales and profitability, among other factors. On Oct. 31, 2018, we lowered our ICR on Hyundai to 'BBB+' from 'A-' to reflect our view that the company's profitability has weakened and is unlikely to reverse significantly over the next 12-24 months.

Based on our ICRs on Hyundai, Kia, and HCA, we did not apply a speculative-grade manufacturer haircut to the HALST 2020-A transaction.

Low diversification haircut

For pools with low diversification, as described in our auto lease criteria, we apply a low diversification haircut in addition to the aforementioned haircuts. Our auto lease criteria describe the six conditions for which, if met by the securitized lease pool, we would apply this type of haircut. These conditions are:

- More than 20% of the residuals mature in any one month.

- More than 50% of the residuals mature in any three months.

- The pool contains three or fewer individual models.

- The pool contains more than 75% of full-size and midsize SUVs, full-size pickup trucks, and full-size vans combined.

- The pool contains more than 75% of compact and hybrid cars combined.

- The pool contains more than 20% of new and discontinued models combined.

The HALST 2020-A pool does not meet any of these six conditions, so we did not apply the low diversification haircut.

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Total stressed residual losses

We analyzed the HALST 2020-A lease pool, applied the relevant residual value haircuts, and assessed stressed return rates of 100.00% and 97.50% at the 'AAA' and 'AA+' rating levels, respectively (representing the loss frequency on nondefaulted leased vehicles of 90.00% and 91.00%), to generate stressed residual loss under each rating scenario (see table 10).

Table 10

Stressed Residual Loss

Scenario (preliminary rating) AAA (sf) AA+ (sf)

Residual haircut as a % of undiscounted base residual 26.00 23.00

Additional excess concentration haircut (%)(i) 1.28 1.13

Total residual haircut as a % of base residual value 27.28 24.13

Total residual haircut as a % of securitization value 15.37 13.65

(i)The excess concentration haircuts are derived by multiplying the total excess concentration calculated in table 9 by each of the rating category haircuts shown in table 8.

Cash Flow Modeling

We tested HALST 2020-A's proposed structure using cash flow scenarios to determine if the credit enhancement levels were sufficient to pay timely interest and principal in full by the notes' legal final maturity dates under our 'AAA' and 'AA+' stress scenarios. We assumed a 100% turn-in rate on the nondefaulting leases (91.00%) at the 'AAA' rating level and a 97.50% turn-in rate on the nondefaulting leases (91.90%) at the 'AA+' rating level, together with no prepayments.

The cash flow results demonstrate that the notes are enhanced to the degree necessary to withstand a level of stressed credit and residual losses that is consistent with the assigned preliminary ratings. The class A notes can withstand a cumulative net credit loss of 4.50% of the securitization value and residual losses equal to 15.67% of the securitization value on 100% of the nondefaulting leases that reach their lease maturity. The class B notes can withstand a cumulative net credit loss of 4.05% of the securitization value and residual losses equal to 13.65% of the securitization value on 97.50% of the nondefaulting leases that reach their lease maturity (see table 11).

Table 11

Cash Flow Assumptions And Results

Class

A B

Scenario (rating) AAA AA+

Cumulative net loss percent (%) 5.00 4.50

Cumulative net loss timing (mos.) 12/24/36 12/24/36

Cumulative net loss (%) 40/80/100 40/80/100

Voluntary prepayments (%) 0.00 0.00

Recoveries (%) 50 50

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Table 11

Cash Flow Assumptions And Results (cont.)

Class

A B

Recovery lag (mos.) 4 4

Residual haircut (%)

Total residual haircut as a percentage of the undiscounted base residual value 27.28 24.13

Total residual haircut as a percentage of the securitization value 15.67 13.65

Vehicle return rate (%) 100.00 97.50

Residual realization lag (mos.) 2 2

S&P Global Ratings' stressed credit and residual loss as a percentage of the 20.17 17.70 securitization value (%)

Result (%)

Approximate credit enhancement in the transaction based on S&P Global 23.63 19.09 Ratings' credit stress and break-even residual stress as a percentage of the securitization value (%)

Sensitivity Analysis

In addition to running stressed cash flows to analyze the amount of credit and residual losses the transaction can withstand, we ran a sensitivity analysis to determine how credit and residual losses that are in line with a moderate ('BBB') stress scenario could affect our ratings on the notes. According to our ratings stability criteria, we will not assign a preliminary 'AAA (sf)' or 'AA+ (sf)' rating if we believe the rating would decline more than one rating category in the first year during a moderate stress scenario. We will also not assign a preliminary 'AAA (sf)' or 'AA+ (sf)' rating if we anticipate that the rating would decline by more than three rating categories in a three-year horizon under moderate stress conditions.

In our view, under the 'BBB' moderate stress scenario, all else being equal, we expect our rating on the class A notes to remain at 'AAA (sf)'. We expect our rating on the class B notes to remain within one rating category of the assigned 'AA+ (sf)' preliminary rating (see chart 6).

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Chart 6

Money Market Tranche Sizing

The proposed money market tranche (the class A-1 notes) has a 12-month legal final maturity date (Jan. 15, 2021). To test whether the money market tranche can be repaid by month 12, we ran cash flows using assumptions to delay the principal collections during the 12-month period. In our cash flow run, we assumed zero defaults and a zero absolute prepayment speed on all leases. We also stressed the recognition of the monthly lease payments and base residual amounts by applying a lag of one and two months, respectively. Based on our cash flow runs, approximately eight months of collections would be sufficient to pay off the money market tranche.

Legal Final Maturity

To test the legal final maturity dates set for the longer-dated tranches (classes A-2 through A-4), we determined when the respective notes would be fully amortized in a zero-loss, zero-prepayment scenario, and then added six months to the result. We also looked to see when these notes would pay off in our stressed cash flow scenarios. In our cash flows for the longest-dated security (class B), we added seven months to the tenor of the last-maturing receivable in the pool to accommodate extensions and residual realization on the receivables. In all of our cash flow scenarios, we confirmed that there is sufficient credit enhancement both to cover losses and to repay the related notes in full by their legal final maturity dates.

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HCA

HCA (BBB+/Stable/A-2) is an 80%-owned subsidiary of Hyundai Motor America, which, in turn, is a wholly owned subsidiary of South Korea-based automaker Hyundai Motor Co. (BBB+/Stable/--). The remaining 20% is owned by Kia Motors America Inc., an affiliate of HCA and a wholly owned subsidiary of Kia Motors Corp. (BBB+/Stable/--). HCA offers both retail and lease products to its customers. HCA is a full-service auto finance company that provides services to Hyundai dealers across the country and arranges financing for facilities refurbishment, real estate purchases, construction, working capital requirements, and dealer inventory.

Related Criteria

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

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

- General Criteria: Methodology For Linking Long-Term And Short-Term Ratings, April 7, 2017

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

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

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

- Criteria | Structured Finance | ABS: Revised General Methodology And Assumptions For Rating U.S. ABS Auto Lease Securitizations, Nov. 29, 2011

- Criteria | Structured Finance | ABS: General Methodology And Assumptions For Rating U.S. Auto Loan Securitizations, Jan. 11, 2011

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

- Criteria | Structured Finance | ABS: Assessing the Risk of Pension Plan Terminations on U.S. Auto Lease Securitizations, Aug. 17, 2004

Related Research

- Kia Motors Corp., April 16, 2019

- Hyundai Motor Co., April 15, 2019

- One Rating Raised, Seven Affirmed On Hyundai Auto Lease Securitization Trust 2017-A And 2017-B, March 13, 2019

- Hyundai Motor Co. Downgraded To 'BBB+' On Weak Profitability; Outlook Stable, Oct. 31, 2018

- Kia Motors Corp. Downgraded To 'BBB+' On Weak Profitability; Outlook Stable, Oct. 31, 2018

www.standardandpoors.com January 8, 2020 21

- Hyundai Capital America Ratings Lowered To 'BBB+' On Weakening Profitability At Hyundai Motor; Outlook Stable, Oct. 31, 2018

- Global Structured Finance Scenario And Sensitivity Analysis 2016: The Effects Of The Top Five Macroeconomic Factors, Dec. 16, 2016

In addition to the criteria specific to this type of security (listed above), the following criteria articles, which are generally applicable to all ratings, may have affected this rating action: "Counterparty Risk Framework: Methodology And Assumptions," March 8, 2019; "Post-Default Ratings 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 And Outlooks," Sept. 14, 2009.

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