OREANDA-NEWS. Fitch Ratings has affirmed the ratings of Series 2012-1E REDS Trust, Series 2013-1 REDS Trust and REDS Warehouse Trust No.1. These transactions are securitisations of first-ranking Australian residential mortgages originated by Bank of Queensland (A-/Stable/F2).The rating actions are listed below.

Series 2012-1E REDS Trust:
AUD331.5m Class A1 (ISIN AU3FN0017281) notes affirmed at 'AAAsf'; Outlook Stable;
AUD50.0m Class A2A (ISIN AU3FN0017299) notes affirmed at 'AAAsf'; Outlook Stable;
GBP100.0m Class A2S (ISIN XS0857670110) notes affirmed at 'AAAsf'; Outlook Stable;
AUD45.1m Class AB (ISIN AU3FN0017307) notes affirmed at 'AAAsf'; Outlook Stable; and
AUD20.1m Class B (ISIN AU3FN0017315) notes affirmed at 'AA-sf'; Outlook Stable.

Series 2013-1 REDS Trust:
AUD369.8m Class A1 (ISIN AU0000RDIHA7) notes affirmed at 'AAAsf'; Outlook Stable; and
AUD170.0m Class A2 (ISIN AU0000RDIHB5) notes affirmed at 'AAAsf'; Outlook Stable.

REDS Warehouse Trust No.1:
AUD414.2m Class A notes affirmed at 'AAAsf'; Outlook Stable; and
AUD18.0m Class B notes affirmed at 'AA-sf'; Outlook Stable.

KEY RATING DRIVERS
The rating actions reflect Fitch's view that credit enhancement levels are able to support the notes' current ratings, in line with Fitch's expectations of Australia's economic conditions. The credit quality and performance of the loans in the respective collateral pools remain in line with the agency's expectations.

At end-Jan 2015, 30+ days arrears for Series 2012-1E REDS and Series 2013-1 REDS stood at 2.0% and 1.9% of the portfolio respectively. While there has been one foreclosure to date for each of the two transactions, no realised losses have been incurred. The 30+ arrears for the REDS Warehouse No.1 Trust was higher at 4.4%, however, since April 2014 no properties have defaulted.

All loans in the pool are covered by lenders' mortgage insurance (LMI) provided by QBE Lenders' Mortgage Insurance Limited (Insurer Financial Strength rating: AA-/Stable) and Genworth Financial Mortgage Insurance Pty Ltd (Insurer Financial Strength rating: A+/Stable). Series 2013-1 REDS' excess spread reserve has a balance of AUD3.4m that can be used as a source of liquidity.

At end-Jan 2015 there was no credit balance for the excess spread reserve for Series 2012-1E REDS, and this will remain the case until specific excess spread trap conditions are satisfied. The current weighted average (WA) loan-to-value ratio (LVR) stands at 48.5% and 49.8% respectively for Series 2012-1E REDS and Series 2013-1 REDS, with a current indexed LVR of 47.6% and 48% respectively. In the case of REDS Warehouse Trust No.1 WA LVR was 47.34 and after indexation reduced to 46.17%.

REDS Warehouse Trust No.1 has a revolving warehouse facility limit of AUD450m. Fitch is comfortable with the revolving period as the portfolio stratifications have not changed significantly since the initial issue, BoQ's product mix has not materially changed over this time, and the portfolio is performing as expected.

RATING SENSITIVITIES
At Series 2012-1E REDS' 'AAAsf' loss severity level of 19.41%, the Class A1, A2A and A2S notes could withstand an increase in foreclosures up to 36.1%. At the same loss severity level, the Class AB notes could withstand an increase in foreclosures up to 12.9%. The Class B notes could withstand an increase in foreclosures up to 6.26%. At Series 2013-1 REDS Trust's 'AAAsf' loss severity level of 22.03%, the Class A1 and A2 notes could withstand an increase in foreclosures up to 46.8%. In the case of REDS Warehouse Trust No.1, the 'AAAsf' loss severity level of 18.4% could withstand an increase in foreclosures up to 31.5%.

Unlike the Series 2012-1E REDS' Class B notes, which are dependent on LMI support, the Class A notes from Series 2012-1E REDS and Series 2013-1 REDS are independent of downgrades to the LMI providers' ratings. The rated notes of the REDS Warehouse Trust No.1 are also LMI independent.

Fitch's initial key rating drivers and rating sensitivities are further discussed in the transactions' corresponding New Issue reports listed under "Related Research". Included as an appendix to the reports for Series 2012-1E REDS and Series 2013-1 REDS are a description of the representations, warranties, and enforcement mechanisms.

A comparison of the transactions' 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.