OREANDA-NEWS. Fitch Ratings has maintained the Rating Watch Negative (RWN) on Flexi ABS Trust 2013-1's (Flexi 2013-1) Class E notes, as the reconciliation of disputed payments between Flexirent Capital Pty Ltd (Flexi) and one of the main vendors to the transaction, who acts as an introducer of receivables, progressed but was not completed by the expected date of 30 June 2016.

The transactions are backed by unsecured commercial lease receivables originated by Flexi. The notes were issued by Perpetual Corporate Trust Limited in its capacity as trustee of the transaction.

The rating actions are as listed below:

AUD1.5m Class E notes (ISIN AU3FN0019485) 'BBBsf'; remains on RWN

KEY RATING DRIVERS

A substantial portion of the pool remains in arrears due to the disputed calculations. Flexi 2013-1's 30+ day arrears were 16.8% and 90+ day arrears were 9.2% at 30 May 2016. Fitch expects arrears to fall as the reconciliation process progresses. Removing the effect of the disputed loans, 30+ arrears were low at 2.0%. Losses were also low, at 3.6% of the original pool, but Fitch expects losses to rise as write-offs from the dispute are realised.

When the reconciliation is completed, the relevant party will make the required payment to the trust. Flexi expects the reconciliation to be completed by 30 September 2016, at the earliest. Fitch expects to resolve the RWN at the end of this period.

RATING SENSITIVITIES

Flexi 2013-1 is currently paying sequentially, as the arrears trigger was breached. This is resulting in a significant build-up of subordination. Fitch may downgrade the class E Flexi 2013-1 notes by up to one category if the resolution results in a significant loss.

DUE DILIGENCE USAGE

No third party due diligence was provided or reviewed in relation to this rating action

DATA ADEQUACY

Fitch conducted a file review of 10 sample loan files, focusing on the underwriting procedures conducted by Flexi compared to its credit policy at the time of underwriting. Fitch checked the consistency and plausibility of the information and no material discrepancies were noted that would impact Fitch's rating analysis.

A comparison of the transaction's representations, warranties and enforcement mechanisms (RW&Es) to those of typical RW&Es for this asset class is available by accessing the reports and/or links given under Related Research below.