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RPT-Fitch Rates Westpac's Series 2013-C4 Tranche 2 Covered Bonds 'AAA'/Stable
January 31, 2014 / 9:17 AM / 4 years ago

RPT-Fitch Rates Westpac's Series 2013-C4 Tranche 2 Covered Bonds 'AAA'/Stable

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Jan 31 (Reuters) - (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.


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 WBC’s IDR.

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%.

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