Pepper I-Prime 2018-1 Trust Prime RMBS Assigned Preliminary Ratings

Stocks and Financial Services Press Releases Wednesday May 23, 2018 09:31
MELBOURNE--23 May--S&P Global Ratings

MELBOURNE (S&P Global Ratings) May 23, 2018--S&P Global Ratings today assigned its preliminary ratings to eight classes of prime residential mortgage-backed securities (RMBS) to be issued by Permanent Custodians Ltd. as trustee of Pepper I-Prime 2018-1 Trust (see list). Pepper I-Prime 2018-1 Trust is a securitization of prime residential mortgages originated by Pepper HomeLoans Pty Ltd.

The preliminary ratings reflect:
  • Our view of the credit risk of the underlying collateral portfolio, including our view that the credit support is sufficient to withstand the stresses we apply. The credit support for the rated notes comprises note subordination.
  • The underwriting standard and centralized approval process of the seller, Pepper Homeloans.
  • The availability of a yield-enhancement reserve, amortization reserve, and overcollateralization amount, which will all be funded by excess spread to cover potential yield shortfalls and loss reimbursements and to repay principal on the notes at various stages of the transaction's term.
  • The extraordinary expense reserve of A$150,000, funded by Pepper on or before closing, available to meet extraordinary expenses. The reserve will be topped up via excess spread if drawn.
  • Our expectation that the various mechanisms to support liquidity within the transaction, including a liquidity facility equal to 2.2% of the outstanding balance of the notes, and principal draws, are sufficient under our stress assumptions to ensure timely payment of interest.
A copy of S&P Global Ratings' complete report for Pepper I-Prime 2018-1 Trust can be found on RatingsDirect, S&P Global Ratings' web-based credit analysis system, at http://www.capitaliq.com.
PRELIMINARY RATINGS ASSIGNED
Class Rating Amount (mil.)
A1-S AAA (sf) 120.0
A1-L AAA (sf) 200.0
A2 AAA (sf) 48.0
B AA (sf) 10.6
C A (sf) 8.0
D BBB (sf) 5.4
E BB (sf) 3.6
F B (sf) 2.2
G NR 2.2
NR--Not rated.

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