TORRENS Series 2014-1 Trust Prime RMBS Assigned Preliminary Ratings

Stocks and Financial Services Press Releases Wednesday February 19, 2014 09:15
MELBOURNE--19 Feb--Standard & Poor's

MELBOURNE (Standard & Poor's) Feb. 19, 2014--Standard & Poor's Ratings Services today assigned its preliminary ratings to four classes of prime residential mortgage-backed securities (RMBS) to be issued by Perpetual Trustee Co. Ltd. as trustee of TORRENS Series 2014-1 Trust (see list).

The preliminary ratings reflect:
  • Our view of the credit risk of the underlying collateral portfolio, including the fact that this is a closed portfolio, which means no further loans will be assigned to the trust after the closing date.
  • Our view that the credit support is sufficient to withstand the stresses we apply. This credit support comprises mortgage insurance covering 100% of the face value of all loans, accrued interest, and reasonable costs of enforcement; and note subordination for the class A, class AB, and class B1 notes.
  • Our expectation that the various mechanisms to support liquidity within the transaction, including a liquidity facility equal to 1.3% of the invested amount of all notes, the principal draw function, the provision of an excess spread reserve to cover potential yield shortfalls, and the provision of an extraordinary expense reserve, funded by note issuance to cover extraordinary expenses are sufficient under our stress assumptions to ensure timely payment of interest.
  • The fixed-to-floating interest-rate swap provided by Bendigo and Adelaide Bank Ltd. hedges the mismatch between receipts from any fixed-rate mortgage loans and the variable-rate RMBS.
  • The margin on the assets, combined with swaps, and the availability of an extraordinary expense reserve are sufficient to ensure timely payment of interest.
  • The underwriting standards and centralized approval process of the seller, Bendigo and Adelaide Bank.

The issuer has informed Standard & Poor's (Australia) Pty Limited that the issuer will be publically disclosing all relevant information about the structured finance instruments that are subject to this rating report or whether relevant information remains non-public.

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