OREANDA-NEWS. June 30, 2015. Fitch Ratings has affirmed the rating on HYDRA IV Funding Corporation's series 1 bonds as follows:

JPY9.6bn* bonds affirmed at 'AAAsf'; Outlook Stable
*as of 25 June 2015

The transaction is a securitisation of residential mortgage loans originated by multiple originators in Japan.

KEY RATING DRIVERS
The affirmation reflects Fitch's view that the available credit enhancement (CE) is sufficient to support the current ratings.

The transaction is backed by two underlying senior beneficial interests (BIs), each of which is supported by subordination and ultimately backed by their respective mortgage loan pools. The delinquency and default performance of the remaining underlying pools has been stable with no significant deterioration since the previous rating action in September 2014.The CE level of each of the senior BIs is considered by Fitch to provide strong protection against potential future performance deterioration.

The transaction has sufficient liquidity enhancement in the form of cash reserve in the Hydra IV trust to support the ratings.

RATING SENSITIVITIES
An unexpected material increase in delinquencies, defaults and loss severities from defaulted loans in the underlying pools may lead to negative rating actions. The CE levels for the rated bonds can support defaults at least 2.4 times higher than assumed in Fitch's 'AAAsf' stress scenario for one of two remaining underlying pools. Fitch considers the other underlying senior BIs as fully cash-collateralised.

DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed 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 underlying pools and the transaction. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third party assessment of the underlying pools information or conducted a review of loan origination files as part of its ongoing monitoring.

The originator of the remaining underlying residential mortgage loan pools is The Momiji Bank, Ltd. The senior BIs backed by the residential mortgage pools originated by The Juroku Bank, Ltd. (formerly The Gifu Bank, Ltd.), The Daito Bank, Ltd. and The Fukushima Bank, Ltd. have been fully redeemed.