OREANDA-NEWS. Fitch Ratings says that structured finance (SF) transactions in Australia remained stable in 2Q15. A total of 83 tranches from 36 transactions were affirmed and 10 tranches in five transactions upgraded as a result of continued good asset performance, and build-up of credit enhancement of the rated notes.

The downgrade of The Royal Bank of Scotland plc (RBS, BBB+/Stable/F2) resulted in three notes from Interstar Millennium Series 2005-3E Trust, a prime residential mortgage-backed securities (RMBS) transaction, being placed on Rating Watch Negative due to the exposure to RBS as currency swap provider. The Short-Term rating of Abel Funding Pty Limited's asset-backed commercial paper was also downgraded as RBS is the sponsor.

Asset performance remained strong overall, reflecting continued strong economic performance. The Australian housing market contributed to the stability of prime RMBS ratings. Stable interest rates in Australia have also helped to reduce volatility in mortgage performance. Unemployment in Australia stood at 6.0% in May 2015 and Fitch expects this to remain stable in 2015.

Australian prime RMBS ratings accounted for most of the affirmations (68), followed by unsecured consumer ABS (seven), reverse mortgage RMBS (six), equipment lease ABS (one), and auto ABS (one).

The 10 upgraded notes were in two ABS transactions (Flexi ABS Trust 2013-1 and Flexi ABS Trust 2013-2) and three prime RMBS (PUMA Masterfund P-16, PUMA Masterfund S-10, PUMA Masterfund S-13) that were previously on Positive Outlook. The Outlooks on three notes from Flexi ABS Trust 2014-1 were revised to Positive due to the build-up of credit enhancement and good transaction performance; all other Outlooks for Australian and New Zealand SF tranches are stable.

There were no rating actions on New Zealand SF transactions in 2Q15.

The 38 transactions reviewed during the quarter, made up approximately 19% of the 198 publicly rated Australian and New Zealand SF transactions outstanding at end-1Q15.

Individual rating action commentaries relating to specific rating actions can be found on Fitch's website at www.fitchratings.com.