Series 2017-1 REDS Trust Prime RMBS Assigned Ratings

Stocks and Financial Services Press Releases Thursday February 16, 2017 09:02
MELBOURNE--16 Feb--S&P Global Ratings

MELBOURNE (S&P Global Ratings) Feb. 16, 2017--S&P Global Ratings today assigned ratings to five of the six classes of prime residential mortgage-backed securities (RMBS) issued by Perpetual Trustee Co. Ltd. as trustee for Series 2017-1 REDS Trust (see list).

The 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. Credit support for the rated notes is provided by subordination, excess spread (if any), and lenders' mortgage insurance (LMI) cover.

Our expectation that the various mechanisms to support liquidity within the transaction, including a liquidity reserve equal to 1.0% of the outstanding note balance; an excess spread reserve, which builds from available excess spread; and the principal draw function are sufficient under our stress assumptions to ensure timely payment of interest.

The extraordinary expense reserve of A$150,000, funded on day one by Bank of Queensland Ltd., available to meet extraordinary expenses. The reserve will be topped up via excess spread if drawn.
The benefit of a standby fixed-to-floating interest-rate swap provided by National Australia Bank Ltd. to hedge the mismatch between receipts from any fixed-rate mortgage loans and the variable-rate RMBS.
A copy of S&P Global Ratings' complete report for Series 2017-1 REDS Trust can be found on RatingsDirect, S&P Global Ratings' web-based credit analysis system, athttp://www.globalcreditportal.com.

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