SMHL Series 2008-1 Fund Class A Notes Rating Affirmed

Stocks and Financial Services Press Releases Wednesday June 20, 2018 16:19
MELBOURNE--20 Jun--S&P Global Ratings

MELBOURNE (S&P Global Ratings) June 20, 2018--S&P Global Ratings today affirmed its 'AAA (sf)' rating on the class A residential mortgage-backed securities (RMBS) issued by Perpetual Ltd. as trustee for SMHL Series 2008-1 Fund.

The rating affirmation follows the redemption of A$250 million in class A bonds and A$30 million in class B bonds using accumulated proceeds from principal collections held in the trust's bank account. This brings the aggregate total amount of class A and class B bonds to approximately A$2.51 billion.

The affirmation reflects:
  • Our view of the credit risk of the underlying collateral portfolio, which has a weighted-average current loan-to-value ratio of 61.4% and weighted-average loan seasoning of 79.3 months.
  • Our view of the support provided by lenders' mortgage insurance (LMI) policies covering 43.3% of the pool of mortgages. 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.
  • That the level of credit support provided to the class A notes, in the form of subordination provided by the class B notes, exceeds the minimum credit support required after giving credit to LMI. We view the credit support provided to the class A notes to be sufficient to withstand the stresses commensurate with the current rating.
  • Our expectation that the liquidity reserve, equal to 1.79% of the bonds outstanding within the transaction, is adequate under our stress assumptions to ensure timely payment of interest.
  • ME Bank Pty Ltd.'s underwriting standards, processes, and servicing quality, which are consistent with industry-wide practices.
  • The benefit of a fixed-rate swap provided by National Australia Bank Ltd. to hedge fixed-rate loans in the mortgage pool.

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