Rating Affirmed On SMHL Series Private Placement Trust 2011-1 RMBS Class A Bonds After Further Issuance

Stocks and Financial Services Press Releases Tuesday September 23, 2014 13:00
MELBOURNE--23 Sep--Standard & Poor's

MELBOURNE (Standard & Poor's) Sept. 23, 2014--Standard & Poor's Ratings Services today affirmed its 'AAA (sf)' rating on the class A residential mortgage-backed securities (RMBS) issued by Perpetual Ltd. as trustee for SMHL Series Private Placement Trust 2011-1.

The rating affirmation follows the issuance of A$178 million in class A bonds and A$2 million in class B bonds, increasing the aggregate total amount of notes issued to A$350.05 million. The proceeds from the bonds issued, along with approximately A$9 million held in cash, will be used to fund the acquisition of additional loans as contemplated in the transaction structure.

The affirmation reflects:
Our view of the credit risk of the underlying collateral portfolio. The loan portfolio has a weighted-average current loan-to-value ratio of 64.4% and is seasoned on a weighted-average basis of 47.5 months.

Our view that the support provided by lenders' mortgage insurance (LMI) policies covering 50.2% of the pool of mortgages and the 3.14% subordination provided by the class B notes is sufficient to withstand the stresses commensurate with the rating. The LMI policies on the insured loans cover 100% of the outstanding principal of the loans insured, including accrued interest during the recovery period and reasonable realization costs.

The benefit of a fixed-rate swap provided by Commonwealth Bank of Australia to hedge fixed-rate loans in the mortgage pool. Fixed-rate loans comprise 33.7% of the pool.
Our expectation that the liquidity facility, equal to 1.71% of the bonds outstanding within the transaction, is adequate under our stress assumptions to cover timely payment of interest.
The underwriting standards, processes, and servicing quality of Members Equity Bank Ltd., which are consistent with industry-wide practices.

SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Rule applies to in-scope securities initially rated (including preliminary ratings) on or after Sept. 26, 2011.

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