(The following was released by the rating agency)
Link to Fitch Ratings' Report: Medallion Trust Series 2013-1 here
SYDNEY, February 17 (Fitch) Fitch Ratings has assigned expected ratings to Medallion Trust Series 2013-1 as listed below. The transaction is a securitisation of first-ranking Australian residential, full-documentation, mortgage loans originated by the Commonwealth Bank of Australia (CBA, ‘AA-'/Stable/‘F1+'), due August 2045.
AUD500m Class A1 notes: ‘AAA(EXP)sf’; Outlook Stable
AUD90m Class A2 notes: ‘AAA(EXP)sf’; Outlook Stable
AUD100m Class A3 notes: ‘AAA(EXP)sf’; Outlook Stable
AUD45m Class B notes: ‘AA-(EXP)sf’; Outlook Stable
AUD15m Class C notes: not rated
The notes will be issued by Perpetual Trustee Company Limited, in its capacity as trustee of the Series. The final ratings are contingent on the receipt of final documentation conforming to information already received.
At the cut-off date, the total collateral pool consisted of 3,271 loans totalling approximately AUD750m. Loans included in the pool were originated by CBA . The weighted average current loan-to-value ratio was 58.9%, and the weighted average seasoning was 45 months. The pool comprises 100% fully verified documentation loans. Investment loans comprise 11.9% of the pool, while owner occupier mortgages make up the remainder. Fixed-rate mortgages account for 10.6% of the pool. Loans covered by lenders’ mortgage insurance - all from Genworth Financial Mortgage Insurance Pty Limited - are limited to approximately 22.7% of the pool. The pool has geographic diversification, with the largest state concentration being New South Wales (32.7%). Fitch has incorporated all the above factors in its credit analysis of the transaction.
The ‘AAA(EXP)sf’ Long-Term ratings with Stable Outlook assigned to the Class A notes are based on the 8% credit enhancement provided by the subordinate class B notes and class C notes; the lenders’ mortgage insurance; and the liquidity facility provided by the CBA, which is equivalent to 3% of the aggregate invested amount of the notes. The ratings also take into account an income reserve provided by CBA, which is equivalent to 0.5% of the total original principal amount of the notes; step-down conditions for the pro rata allocation of principal repayments; interest rate arrangements the trustee has entered into; and CBA’s mortgage underwriting and servicing capabilities.
The expected ‘AA-(EXP)sf’ Long-Term ratings with Stable Outlook assigned to the class B notes are based on all the strengths supporting the class A notes except their credit enhancement levels.
Fitch’s stress and rating sensitivity analysis is discussed in the corresponding presale report entitled “Medallion Trust Series 2013-1”, published today. Included as an appendix to the report are a description of the representations, warranties, and enforcement mechanisms