OREANDA-NEWS. Fitch Ratings has affirmed the ratings of eight Light Trust RMBS tranches from three transactions backed by pools of Australian first-ranking residential mortgages originated by People's Choice Credit Union (a trading name of Australian Central Credit Union Ltd.). The rating actions are as follows:

Light Trust No. 2 Trust:
AUD39.9 m Class A1 notes affirmed at 'AAAsf'; Outlook Stable;
AUD7.3m Class A2 notes affirmed at 'AAAsf'; Outlook Stable; and
AUD2.3m Class B notes affirmed at 'BBsf'; Outlook Stable.

Light Trust No. 3 Trust:
AUD138.8m Class A3 notes affirmed at 'AAAsf'; Outlook Stable; and
AUD10.3m Class AB notes affirmed at 'AAAsf'; Outlook Stable.

Light Trust No. 4 Trust:
AUD190.3m Class A notes affirmed at 'AAAsf'; Outlook Stable;
AUD22.5m Class AB notes affirmed at 'AAAsf'; Outlook Stable; and
AUD9.0m Class B1 notes affirmed at 'AA-sf'; Outlook Stable.

KEY RATING DRIVERS
The affirmations reflect Fitch's view that available credit enhancement is sufficient to support the notes' current ratings, and the agency's expectations of Australia's economic conditions. The credit quality and performance of the loans in the collateral pools have remained in line with Fitch's expectations.

At 28 February 2015, Light Trust No. 2 reported 30+ days arrears at 1.5% and Light Trust No. 3 at 1.76%, both of which were above Fitch's Dinkum RMBS Index of 1.15%. Light Trust No. 4 recorded the lowest level of arrears at 0.24%.

As at 28 February 2015, the three transactions were 100% covered by lenders' mortgage insurance (LMI) provided by QBE Lenders Mortgage Insurance Ltd (Insurer Financial Strength Rating: AA-/Stable). The transactions have experienced no losses since closing.

RATING SENSITIVITIES
Sequential pay-down has increased credit enhancement for the senior notes of each transaction, with the 'AAAsf' rated notes able to withstand many multiples of the latest reported arrears.

The ratings of the transactions' Class A notes are independent of downgrades to the LMI provider's ratings. The Class AB notes of Light Trust 3 are LMI dependent, while the Class AB notes of Light Trust No.4 are independent of the LMI provider's ratings.

The 'AAAsf' modeled loss severities after LMI of between 16.22% and 18.72%, with the Class A notes of each transaction able to withstand default rates of between 28.97% and100% while the Class AB notes can withstand default rates of between 23.5% and 35.11% at their modeled 'AAAsf' loss severity levels, with LMI. This analysis excludes credit to excess spread, and as a result, the agency considers that a downgrade of any senior notes rated 'AAAsf' to be unlikely.

Current credit enhancement levels for the Light Trust No.4 Class B1 notes are able to withstand default rates of 29.09% at the 'AA-sf' loss severity. However, once the transaction moves to pro-rata amortisation, the Class B1 notes will be constrained by concentration.

Fitch's initial Key Rating Drivers and Rating Sensitivities are further discussed in the corresponding New Issue reports listed under "Related Research".

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