21.08.2015, 13:03
Fitch Affirms Pinnacle Series Trust 2014-SST 'AAAsf'; Outlook Stable
OREANDA-NEWS. Fitch Ratings has affirmed the rating on Pinnacle Series Trust 2014-SST's Class A notes. The transaction is a securitisation of first-ranking prime Australian residential mortgages originated by Police & Nurses Limited (P&N), trading as P&N Bank. The notes are issued by BNY Trust Company of Australia Limited as trustee of the Pinnacle Series Trust 2014-SST.
The rating action is listed below:
AUD489.5m Class A notes affirmed at 'AAAsf'; Outlook Stable.
KEY RATING DRIVERS
The affirmation reflects Fitch's view that credit enhancement is sufficient to support the current rating, and Fitch's expectations of Australia's economic conditions.
Arrears have remained well below Fitch's Dinkum Index of 1.17%. At 31 July 2015, 30+ days arrears stood at 0.66%.
The Fitch-calculated weighted average indexed loan to value ratio (LVR) was 66.3%, compared with 64.2% before indexation. The pool is highly concentrated in Western Australia, with 97.7% of mortgages in the portfolio secured over properties in the state.
There have been no recorded losses since the transaction closed in February 2014. QBE Lenders' Mortgage Insurance Limited (AA-/Stable) provided lenders' mortgage insurance to 3.6% of the pool at end-July 2015, and Genworth Financial Mortgage Insurance Pty Ltd (A+/Stable) covered 10.6%.
RATING SENSITIVITIES
The rating on the Class A note is independent of a downgrade of the LMI providers' ratings. Fitch's 'AAAsf' breakeven stressed default rate is 20%. The Class A notes can withstand an additional 7.84% in defaults at Fitch's 'AAAsf' loss severity.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
DATA ADEQUACY
Fitch conducted a file review of 10 sample loan files focusing on the underwriting procedures conducted by P&N Bank compared with P&N Banks's credit policy at the time of underwriting. Fitch has checked the consistency and plausibility of the information and no material discrepancies were noted that would impact Fitch's rating analysis.
This transaction has a 10-year revolving period, of which less than nine years remain. Fitch is comfortable with the long revolving period because the transaction has portfolio parameters, the portfolio stratifications have not changed significantly since initial issue, and the portfolio is performing as expected.
A comparison of the transaction's 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.
The rating action is listed below:
AUD489.5m Class A notes affirmed at 'AAAsf'; Outlook Stable.
KEY RATING DRIVERS
The affirmation reflects Fitch's view that credit enhancement is sufficient to support the current rating, and Fitch's expectations of Australia's economic conditions.
Arrears have remained well below Fitch's Dinkum Index of 1.17%. At 31 July 2015, 30+ days arrears stood at 0.66%.
The Fitch-calculated weighted average indexed loan to value ratio (LVR) was 66.3%, compared with 64.2% before indexation. The pool is highly concentrated in Western Australia, with 97.7% of mortgages in the portfolio secured over properties in the state.
There have been no recorded losses since the transaction closed in February 2014. QBE Lenders' Mortgage Insurance Limited (AA-/Stable) provided lenders' mortgage insurance to 3.6% of the pool at end-July 2015, and Genworth Financial Mortgage Insurance Pty Ltd (A+/Stable) covered 10.6%.
RATING SENSITIVITIES
The rating on the Class A note is independent of a downgrade of the LMI providers' ratings. Fitch's 'AAAsf' breakeven stressed default rate is 20%. The Class A notes can withstand an additional 7.84% in defaults at Fitch's 'AAAsf' loss severity.
DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.
DATA ADEQUACY
Fitch conducted a file review of 10 sample loan files focusing on the underwriting procedures conducted by P&N Bank compared with P&N Banks's credit policy at the time of underwriting. Fitch has checked the consistency and plausibility of the information and no material discrepancies were noted that would impact Fitch's rating analysis.
This transaction has a 10-year revolving period, of which less than nine years remain. Fitch is comfortable with the long revolving period because the transaction has portfolio parameters, the portfolio stratifications have not changed significantly since initial issue, and the portfolio is performing as expected.
A comparison of the transaction's 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.
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