Fitch Ratings has affirmed the ratings of two note classes from two SMHL transactions at 'AAAsf' with a Stable Outlook.
The transactions consist of notes backed by pools of first-ranking Australian residential full-documentation mortgage loans. All mortgages were originated by
RATING ACTIONS
Entity / Debt
Rating
Prior
SMHL Series 2018-1 Fund
A AU3FN0044798
LT
AAAsf
Affirmed
AAAsf
A AU3FN0056990
LT
AAAsf
Affirmed
AAAsf
Page
of 1
VIEW ADDITIONAL RATING DETAILS
KEY RATING DRIVERS
Stable Asset Performance: The transactions' 30+ day arrears at
Credit Enhancement Supports Ratings: We did not perform asset or cash flow modelling for this review, in line with our APAC Residential Mortgage Rating Criteria. SMHL 2020-1 and SMHL 2018-1's rated notes have subordination of at least 3.4x and 1.4x, respectively, of the 'AAAsf' portfolio loss from the last model run. SMHL 2020-1 is paying down principal pro rata and will revert to sequential paydown if performance deteriorates or it reaches the clean-up call.
SMHL 2018-1 has extended its revolving period to
Low Operational Risk: BOQ is headquartered in
Tight Labour Market Supports Outlook: Portfolio performance is supported by
The key rating drivers listed in the applicable sector criteria, but not mentioned above, are not material to this rating action.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Transaction performance may be affected by a deterioration in economic fundamentals and consumers' financial position in
Unanticipated increases in the frequency of defaults and loss severity on defaulted receivables could produce loss levels higher than Fitch's base case and are likely to result in a decline in credit enhancement and remaining loss-coverage levels available to the notes. Decreased credit enhancement may make certain note ratings susceptible to negative rating action, depending on the extent of the coverage decline. Hence, Fitch conducts sensitivity analysis by stressing a transaction's initial base-case assumptions.
The rating sensitivity section provides insight into the model-implied sensitivities the transaction faces when assumptions - WA foreclosure frequency or WA recovery rates - are modified, while holding others equal. The modelling process uses the modification of default and loss assumptions to reflect asset performance in up and down environments. The results should only be considered as one potential outcome, as the transactions are exposed to multiple dynamic risk factors.
The transaction structure supports a lenders' mortgage insurance (LMI)-independent rating for the rated notes. LMI is not required to support the ratings due to the level of credit support provided by the lower notes.
Rating action commentary for SMHL 2018-1
Rating action commentary for SMHL 2020-1
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
All rated notes are at the highest level on Fitch's scale and cannot be upgraded.
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 information as part of its ongoing monitoring. Prior to the transactions closing, Fitch sought to receive a third-party assessment conducted on the asset portfolio information, but none was available.
As part of its ongoing monitoring, Fitch reviewed a small targeted sample of
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
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
The issuer has informed Fitch that not all relevant underlying information used in the analysis of the rated notes is public.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
Additional information is available on www.fitchratings.com
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