Fitch Rates Westpac's Series 2013-C5 Covered Bonds 'AAA'/Stable

Mon Nov 25, 2013 8:37pm EST

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(The following statement was released by the rating agency) SYDNEY, November 25 (Fitch) Fitch Ratings has assigned Westpac Banking Corporation's (WBC, AA-/Stable/F1+) Series 2013-C5 issue of USD1.5bn mortgage covered bonds a rating of 'AAA'. The Outlook is Stable. The fixed-rate bond is due in November 2018 and benefits from a 12-month extendable maturity. This brings the total issuance from the programme to AUD17.4bn. KEY RATING DRIVERS The rating is based on WBC's Long-Term Issuer Default Rating (IDR) of 'AA-', a Discontinuity Cap (D-Cap) of 2 (high) and an asset percentage (AP) of 89%, which is equivalent to Fitch's breakeven AP for a 'AAA' rating, supporting a 'AA' rating on a probability of default (PD) basis, and a 'AAA' rating after giving credit for recoveries. The Outlook on the covered bonds reflects the Stable Outlook on WBC's IDR. At end-October 2013, the cover pool consisted of 113,891 loans secured by first-ranking mortgages of Australian residential properties with a total outstanding balance of AUD27.8bn and AUD2.2bn of cash. Maturity mismatches are significant, with the weighted average residual life of the assets being 16.1 years, and 4.2 years for the liabilities. RATING SENSITIVITIES The 'AAA' rating would be vulnerable to a downgrade if: the issuer's Long-Term IDR were downgraded by two or more notches; the D-Cap fell by more than one category; or the programme's AP rose above the breakeven AP of 89%. Contacts: Primary Analyst Claire Heaton Director +61 2 8256 0361 Fitch Australia Pty Ltd., Level 15, 77 King Street, Sydney NSW 2000 Secondary Analyst James Leung Director +61 2 8256 0322 Committee Chairperson Atsushi Kuroda Senior Director +813 3288 2692 The source of information used to assess these ratings was Westpac Banking Corporation. The issuer has informed Fitch that not all relevant underlying information used in the analysis of the rated bonds is public. Applicable criteria, 'Covered Bonds Rating Criteria', dated 4 September 2013; 'Counterparty Criteria for Structured Finance and Covered Bonds', dated 13 May 2013; 'Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum', dated 13 May 2013 ; and 'APAC Residential Mortgage Criteria', dated 1 August 2013; 'APAC Residential Mortgage Criteria Addendum - Australia', dated 1 August 2013; 'Covered Bonds Rating Criteria - Mortgage Liquidity & Refinance Stress Addendum' dated 3 June 2013; 'Global Criteria for Lender's Mortgage Insurance in RMBS', dated 1 August 2013, are available at www.fitchratings.com. Media Relations: Iselle Gonzalez, Sydney, Tel: +61 2 8256 0326, Email: iselle.gonzalez@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable Criteria and Related Research: Covered Bonds Rating Criteria here Counterparty Criteria for Structured Finance and Covered Bonds here Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum here APAC Residential Mortgage Criteria here APAC Residential Mortgage Criteria Addendum – Australia here Covered Bonds Rating Criteria - Mortgage Liquidity and Refinance Stress Addendum here Global Criteria for Lenders’ Mortgage Insurance in RMBS here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S FREE WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Australia Pty Ltd holds an Australian financial services licence (AFS licence no. 337123) which authorises it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001.

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