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July 23 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has affirmed the rating of Lion Series 2009-1 Trust’s Class A notes as shown below. The transaction is a securitisation of Australian conforming residential mortgages originated by HSBC Bank Australia Limited (HSBC). Based on the note balances as of 31 May 2014, the ratings are as follows:
AUD1,299.2m Class A affirmed at ‘AAAsf’; Outlook Stable.
The affirmation reflects Fitch’s view that the available credit enhancement and excess spread is able to support the current rating, the stable credit quality and performances of the pool, and Fitch’s expectations of Australia’s economic conditions.
The transaction is currently paying down on a pro-rata basis with principal distributions being allocated to the Class A and Class B notes. As of 31 May 2014, the pool consisted of 5,849 loans totalling AUD1,511.6m with 30+ days arrears at 0.46%, below Fitch’s Dinkum Index of 1.21%. There is no lenders’ mortgage insurance, and there have been no losses to date.
The transaction remains within its substitution period. Fitch is comfortable with the revolving period as the portfolio stratifications have not changed significantly since initial issue, HSBC’s product mix has not materially changed since closing and the portfolio is performing as expected.
The prospect of a downgrade is considered remote given the level of subordination available to the Class A notes. A significant and unexpected increase in delinquencies, defaults and losses would be necessary before any negative rating action would be considered. Credit enhancement levels for the ‘AAAsf’ rated notes can support many multiples of arrears.