RPT-Fitch: Australia and New Zealand SF Continues to Perform in 1Q14

Wed Apr 16, 2014 3:31am EDT

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April 16 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings says that structured finance (SF) transactions in Australia and New Zealand remained stable in 1Q14 as 355 tranches from 97 transactions were either affirmed or upgraded as a result of continued good asset performance in the two countries.

Asset performance remained strong overall, reflecting the continuing strong economic performance and the rebound in the Australian housing market.

Prime RMBS notes accounted for most of the affirmations (178 in Australia and eight in New Zealand), followed by Australian auto loans and leases ABS (124), Australian non-conforming RMBS (24), small balance CMBS (10), and other ABS (three). The numbers largely reflect the composition of the Fitch-rated portfolio.

Fitch upgraded the class B notes of the Australian prime RMBS transaction, Medallion Trust Series 2013-1 in 1Q14, reflecting the build-up of credit enhancement.

Five tranches from two Australian non-conforming RMBS were upgraded reflecting increased credit enhancement, stable asset performance, and strong excess income flows. The upgraded tranches were classes MZ, BA and BZ from Sapphire IX Series 2006-1 Trust, and classes BZ and CA from Sapphire X Series 2007-1 Trust. The upgraded Sapphire X notes had been downgraded by one notch in September 2008 due to high arrears and losses not covered by excess spread at the time.

The class C notes from two well-seasoned auto ABS transactions, Bella Trust Series 2010-1 and Bella Trust Series 2010-2, were upgraded, reflecting the build-up in credit enhancement and Fitch's view that the transactions are likely to cover future losses with available excess income and experience lower-than-expected realised losses. Bella Trust Series 2010-1 was subsequently paid in full.

The 97 transactions reviewed during the quarter make up approximately 53% of the 183 Fitch publicly rated Australia and New Zealand SF transactions outstanding at end-1Q14.

The Outlooks on most SF ratings in Australia and New Zealand remain Stable with the exception of two Outlooks that were revised to Positive on two Australian auto ABS tranches in 1Q14.

Individual rating action commentaries relating to specific rating actions can be found on Fitch's website at www.fitchratings.com.

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