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Fitch Affirms Three Flexi ABS Transactions; Outlook Stable
April 10, 2017 / 7:46 AM / 4 months ago

Fitch Affirms Three Flexi ABS Transactions; Outlook Stable

(The following statement was released by the rating agency) SYDNEY, April 10 (Fitch) Fitch Ratings has affirmed 16 tranches across Flexi ABS Trust 2015-1, Flexi ABS Trust 2015-2 and Flexi ABS Trust 2016-1. The Rating Outlook on each tranche remains Stable. The transactions are securitisations of small-balance consumer-loan receivables and unsecured commercial-lease receivables. The notes were issued by Perpetual Corporate Trust Limited in its capacity as trustee. A full list of rating actions follows at the end of this commentary. KEY RATING DRIVERS The affirmations reflect Fitch's view that initial sequential amortisation has resulted in a build-up of credit enhancement for the rated notes and the transactions' strong performance compared with Fitch's expectations. All transactions are currently paying pro rata amortisation across all notes. Total net losses have been below Fitch's base cases to date and excess spread has been more than sufficient to cover any losses incurred. The Flexi 2015-1 transaction contains 7.3% of assets with disputed payments between Flexirent Capital Pty Ltd (Flexi) and one of the main vendors to the Flexi 2015-1 transaction that acts as an introducer of receivables. The reconciliation of the disputed payments has progressed, but was not completed by the expected date of 30 September 2016. Losses are low at 3.6% of the original pool, but are expected to increase as write-offs from the dispute are realised. RATING SENSITIVITIES Flexi 2015-1 is paying pro rata to all classes, limiting build-up of credit enhancement. If the arrears trigger of 60+ days arrears, averaged over six months, of greater than 4% is breached, the transaction will revert to sequential pay. There is sufficient subordination to protect the notes in the event of total non-payment of the disputed assets. Fitch has affirmed all rated notes for Flexi 2015-1 as a result. Both Flexi 2015-2 and Flexi 2016-1 transactions are currently amortising pro rata, limiting additional build-up of subordination. Switch back to sequential payment is only expected if a charge-off occurs or the 60+ day arrears average over six months is greater than 4% of the pool. The prospect of downgrade is considered remote at present, given the performance of the pool to date, strong excess spread and subordination. Both transactions can withstand additional losses. USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G-10 Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action. DATA ADEQUACY Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pools and the transactions. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third-party assessment of the asset portfolio as part of its ongoing monitoring. As part of its ongoing monitoring, Fitch reviewed a small targeted sample of parent FlexiGroup Limited's origination files and found the information contained in the reviewed files to be adequately consistent with the originator's policies and practices and the other information provided to the agency about the asset portfolio. Overall, Fitch's assessment of the asset pool information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable. The full list of rating actions is shown below: Flexi ABS Trust 2015-1 (as at February 2017 payment date) AUD47.4 million Class A notes (ISIN AU3FN0027256) affirmed at 'AAAsf'; Outlook Stable AUD5.1 million Class B notes (ISIN AU3FN0027264) affirmed at 'AAsf'; Outlook Stable AUD5.1 million Class C notes (ISIN AU3FN0027272) affirmed at 'Asf'; Outlook Stable AUD2.6 million Class D notes (ISIN AU3FN0027280) affirmed at 'BBBsf'; Outlook Stable AUD3.4 million Class E notes (ISIN AU3FN0027298) affirmed at ''BBsf'; Outlook Stable Flexi ABS Trust 2015-2(as at February 2017 payment date) AUD31.9 million Class A2 notes (ISIN AU3FN0027868) affirmed at 'AAAsf'; Outlook Stable AUD4.6 million Class B notes (ISIN AU3FN0027876) affirmed at 'AAsf'; Outlook Stable AUD3.5 million Class C notes (ISIN AU3FN0027892) affirmed at 'Asf'; Outlook Stable AUD2.7 million Class D notes (ISIN AU3FN0027900) affirmed at 'BBBsf'; Outlook Stable AUD1.5 million Class E notes (ISIN AU3FN0027918) affirmed at 'BBsf'; Outlook Stable Flexi ABS Trust 2016-1(as at March 2017 payment date) AUD39.7 million Class A2 notes (ISIN AU3FN0031092) affirmed at 'AAAsf'; Outlook Stable AUD32.8 million Class A2-G notes (ISIN AU3FN0031100) affirmed at 'AAAsf'; Outlook Stable AUD8.8 million Class B notes (ISIN AU3FN0031118) affirmed at 'AAsf'; Outlook Stable AUD10.5 million Class C notes (ISIN AU3FN0031126) affirmed at 'Asf'; Outlook Stable AUD7.4 million Class D notes (ISIN AU3FN0031134) affirmed at 'BBBsf'; Outlook Stable AUD5.5 million Class E notes (ISIN AU3FN0031142) affirmed at 'BBsf'; Outlook Stable SOURCES OF INFORMATION The information below was used in the analysis: Loan-by-loan data provided by FlexiGroup as at 28 February 2017 Transaction reporting data provided by FlexiGroup as at 28 February 2017 Loan enforcement details provided by FlexiGroup as at 28 February 2017 The issuer has informed Fitch that not all relevant underlying information used in the analysis of the rated notes is public. Contacts: Lead Surveillance Analyst Hai Duong Le Associate Director Phone +61 2 8256 0358 Fitch Australia Pty Ltd Level 15, 77 King St, Sydney, NSW 2000 Australia Committee Chairperson Atsushi Kuroda Senior Director +813 3288 2692 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria Global Consumer ABS Rating Criteria (pub. 01 Dec 2016) here Global Structured Finance Rating Criteria (pub. 27 Jun 2016) here SME Balance Sheet Securitisation Rating Criteria (pub. 03 Mar 2017) here Structured Finance and Covered Bonds Counterparty Rating Criteria (pub. 20 Mar 2017) here Structured Finance and Covered Bonds Counterparty Rating Criteria: Derivative Addendum (pub. 20 Mar 2017) here Related Research Flexi ABS Trust 2015-1 here Flexi ABS Trust 2015-2 here Flexi ABS Trust 2016-1 here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. 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Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

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