RPT-Fitch Affirms Ratings of REDS Warehouse Trust No.1

Thu May 1, 2014 5:37am EDT

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May 1 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has affirmed the ratings of Bank of Queensland Limited's (BOQ, BBB+/Stable/F2) REDS Warehouse Trust No.1 mortgage-backed floating-rate notes as follows:

AUD354.5m Class A notes affirmed at 'AAAsf'; Outlook Stable; and

AUD18.0m Class B notes affirmed at 'AA-sf'; Outlook Stable.

The notes are issued by Perpetual Trustee Company Limited in its capacity as trustee of REDS Warehouse Trust No.1.

KEY RATING DRIVERS

The rating actions reflect Fitch's view that available credit enhancement supports the notes at their current rating levels, the agency's expectations of Australia's economic conditions, and that the credit quality and performance of the underlying loans have remained in line with the agency's expectations. As at end-February 2014, the collateral pool consisted of 1,487 loans with a total portfolio balance of AUD367.7m, with a weighted average loan-to-valuation ratio of 49.3%, and a weighted average seasoning of 40.6 months. Reduced documentation loans make up 2.9% of the transaction. The trust's current facility limit is AUD500m. Lenders mortgage insurance (LMI) covers 100% of the pool, with 93.1% provided by QBE Lenders' Mortgage Insurance Limited and the remaining 6.9% provided by Genworth Financial Mortgage Insurance Pty Ltd

RATING SENSITIVITIES

Unexpected increases in delinquencies, defaults and losses would be necessary before any negative rating action would be considered.

The ratings on the Class A notes are independent of downgrades to the LMI providers' ratings, while the Class B notes are dependent on the LMI providers' ratings.

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