December 10, 2012 / 1:07 AM / 5 years ago

TEXT-Fitch Rates FirstMac Series 3-2012 'AAA(EXP)sf'

(The following was released by the rating agency)

Link to Fitch Ratings’ Report: FirstMac Mortgage Funding Trust Series 3-2012

here

SYDNEY, December 10 (Fitch) Fitch Ratings has assigned Firstmac Mortgage Funding Trust Series 3-2012 residential mortgage-backed floating-rate notes due December 2043 expected ratings, as follows:

AUD226m class A-1 notes: ‘AAA(EXP)sf’; Outlook Stable

AUD50m class A-2 notes: ‘AAA(EXP)sf’; Outlook Stable

AUD12.5m class AB notes: ‘AAA(EXP)sf’; Outlook Stable

AUD10m class B-1 notes: not rated

AUD1.5m class B-2 notes: not rated

The notes will be issued by FirstMac Fiduciary Services Pty Ltd in its capacity as trustee of the Series. The final ratings will be contingent upon the receipt of final documentation conforming to information already received.

“The transaction includes the class A-2 soft bullet note with a scheduled maturity date at five years after closing. The note will either be redeemed by issuance of pass-through Class A2-R notes or converted to pass-through class A-2 notes,” said Anthea Clark, Associate Director in Fitch’s Structured Finance team.

At the pool cut-off date, the total collateral pool consisted of 1,192 loans, originated by FirstMac nominee originators and HSBC Bank Australia Limited, totaling approximately AUD295m. The pool comprised entirely of fully verified documentation loans. Fitch’s calculated weighted average current loan-to-value ratio was 71.1%, with the weighted average seasoning at approximately 22 months. Investment loans make up 44.5% of the pool, with the remainder being owner-occupier mortgages. Of the mortgages in the portfolio 48.5% are interest-only loans. Floating-rate mortgages represent 97.1% of the pool. The pool is geographically diversified, reflecting population distribution, with 31.9% of the loans in New South Wales, 31% in Queensland, and 20.3% in Victoria. Fitch has incorporated all the above factors in its credit analysis of the transaction.

As at the cut-off date, lenders’ mortgage insurance (LMI) cover was provided on 72.4% of the pool by Genworth Financial Mortgage Insurance Pty Limited, and on 27.6% by QBE Lenders Mortgage Insurance Limited (‘AA-'/Stable).

The ‘AAAsf’ expected Long-Term ratings with Stable Outlook assigned to the class A-1 and class A-2 notes are based on the 8% credit enhancement available to the class A notes provided by their subordinate Class AB, B-1 and B-2 notes; a spread reserve; the quality of the collateral; the interest rate arrangements the trustee will enter into; the 100% mortgage insurance policies provided by the LMIs; and FirstMac’s mortgage servicing capabilities. The ‘AAAsf’ expected Long-Term rating with Stable Outlook assigned to the Class AB notes is based on the 3.8% credit enhancement available to the Class AB notes provided by their subordinate notes, as well as the aforementioned factors.

Fitch’s stress and rating sensitivity analysis is discussed in the presale report entitled “Firstmac Mortgage Funding Trust Series 3-2012”.

The full presale report is available on www.fitchratings.com, or by clicking on the link above.

Included in a corresponding presale appendix, entitled “ FirstMac Mortgage Funding Trust Series 3-2012”, is a description of the representations, warranties, and enforcement mechanisms, published today, also available on www.fitchratings.com.

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