(Repeat for additional subscribers)
Jan 31 (The following statement was released by the rating agency)
Fitch Ratings has assigned Westpac Banking Corporation's (WBC, AA-/Stable/F1+)
Series 2013-C4 tranche 2 issue of AUD225m mortgage covered bonds a rating of 'AAA'. The Outlook
is Stable. The fixed-rate bond is due in November 2023 and benefits from a 12-month extendable
maturity. This brings the total issuance of Series 2013-C4 to AUD1.125bn.
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 the asset percentage (AP) used in the
asset coverage test (ACT) of 89.0%. The latter provides a small cushion,
compared with Fitcha€™s aAAAa€™ breakeven AP of 89.5%, supporting a aAAa€™ rating on a
probability of default basis, and a aAAAa€™ rating after giving credit for
recoveries. The Outlook on the covered bonds reflects the Stable Outlook on
At end-December 2013, the cover pool consisted of 109,854 loans secured by
Australian residential first-ranking mortgages, with a total outstanding balance
of AUD26.6bn and AUD3.4bn of cash.
Maturity mismatches are significant, with the weighted-average residual life of
the assets at 16.1 years, and of the liabilities at 4.0 years.
The 'AAA' rating would be vulnerable to a downgrade if the issuer's Long-Term
IDR were to be 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 89.5%.