MTG Ariera Trust Repo Series No.1 Prime RMBS Rating Affirmed

Stocks and Financial Services Press Releases Monday June 18, 2018 17:24
MELBOURNE--18 Jun--S&P Global Ratings

MELBOURNE (S&P Global Ratings) June 18, 2018--S&P Global Ratings today affirmed its 'AAA (sf)' rating on the class A prime residential mortgage-backed securities (RMBS) issued by Perpetual Corporate Trust Ltd. as trustee of MTG Ariera Trust Repo Series No.1 (see list). MTG Ariera Trust Repo Series No.1 is a securitization of prime residential mortgages originated by Bananacoast Community Credit Union Ltd. (BCU).

The purchase of new assets into the trust is being funded by the issuance of notes. The transaction has a revolving period until April 2027, during which time the trust can hold up to 15% of principal collections for the purchase of new assets.

The rating affirmation reflects:
  • Our view of the credit risk of the underlying collateral portfolio. As of May 2018, the pool has a current pool balance of approximately A$163.36 million. The pool's current weighted-average loan-to-value ratio is 65.4% and the weighted-average seasoning is 48.3 months. Some 14.1% of the portfolio's collateral pool has lenders' mortgage insurance (LMI) covering 100% of the face value of the loans, accrued interest, and reasonable costs of enforcement.
  • Our view that the subordination provided to the class A notes exceeds the minimum assessed credit support at a 'AAA (sf)' level after giving credit to LMI.
  • That the assets being acquired are all loans to self-managed superannuation funds (SMSF). We contemplated the inclusion of SMSF loans originated by BCU when we assigned our rating to the class A notes; however, this is the first time they have been added to the collateral pool. Following the new note issuance, SMSF loans will make up 20.8% of the portfolio.
  • That the liquidity reserve of 1.0% of the aggregate outstanding note balance, funded by note overissuance, is available for required payments.
  • BCU's underwriting standards, processes, and servicing quality, which are consistent with industry-wide practices.
Class Rating Amount (mil. A$)
A AAA (sf) 147.8
B NR (sf) 17.5
NR--Not rated.

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