OREANDA-NEWS. Fitch Ratings has assigned final ratings to APOLLO Series 2015-1 Trust. The transaction is a securitisation of first-ranking Australian residential mortgage loans originated by Suncorp-Metway Limited (Suncorp, A+/Stable/F1), due in April 2046. The ratings are as follows:

AUD1,150.0m Class A notes: 'AAAsf'; Outlook Stable;
AUD62.5m Class AB notes: not rated;
AUD30.0m Class B1 notes: not rated;
AUD4.9m Class B2 notes: not rated; and
AUD2.6m Class B3 notes: not rated.

The notes have been issued by Perpetual Trustee Company Limited, in its capacity as trustee of APOLLO Series 2015-1 Trust.

KEY RATING DRIVERS
Transaction Features: The final ratings are based on the pool with 100% lenders' mortgage insurance (LMI) policy coverage; an excess revenue reserve that will be built through 50% of available excess spread, accruing from the closing date and available to provide liquidity support and for reimbursement of principal draws; the interest rate arrangements the trustee has entered into; Suncorp's mortgage underwriting and servicing capabilities; and the 8.0% credit enhancement provided by the subordinate Class AB, B1, B2 and B3 notes.

Experienced Originator: Suncorp is an experienced originator with extensive experience in mortgage lending and servicing. Suncorp originates through a network of branches, mobile lenders and other approved lenders.

Key Characteristics: The weighted-average (WA) seasoning of the portfolio is significant at 47 months, and with a WA loan/value ratio (LVR) of 64.0%. Each loan in the portfolio comprises full-documentation mortgages, while investment loans represent 21.7% of the pool by balance. The geographic distribution of the pool is representative of Suncorp's customer base.

Dynamic Liquidity Support Mechanism: The excess reserve, principal draws and a liquidity facility, which is initially equivalent to 1.3% of the aggregate outstanding balance of all performing loans, will provide cover for the liquidity shortfalls of all classes of notes. Liquidity support will not be available to the Class B notes if unreimbursed charge-offs relating to that class of notes exist, while additional triggers of average 60+ day arrears not exceeding 4%, and the payment date being prior to the call date, will apply to the Class B3 notes.

Pro Rata Mechanism: Interest is paid sequentially (after expenses) towards Class A, AB, B1, B2, and then the Class B3 note, as is typical with other Australian RMBS issuance. Principal will be allocated pro rata toward all classes of notes if certain conditions are met.

RATING SENSITIVITIES
Unexpected decreases in the value of residential property or increases in the frequency of foreclosures and loss severity on defaulted mortgages could produce loss levels higher than Fitch's base case, possibly resulting in negative rating actions on the notes. Fitch has evaluated the sensitivity of the assigned ratings to increased defaults and reduced recovery rates over the life of the transaction.

Its analysis found that the Class A notes' ratings were not impacted under Fitch's moderate and severe default (15% and 30% increase) scenarios. It also found that the Class A notes' ratings were not impacted under Fitch's moderate and severe recovery (15% and 30% decrease) scenarios, and remained stable under a combination of increased defaults and reduced recovery rates. The Class A notes' ratings are also independent of LMI.

Key Rating Drivers and Rating Sensitivities are further discussed in the corresponding new issue report entitled "APOLLO Series 2015-1 Trust", published today. Included as an appendix to the report are a description of the representations, warranties, and enforcement mechanisms.