OREANDA-NEWS. November 30, 2015.  Fitch Ratings has affirmed the ratings on HYDRA V Funding Corporation's series 1 bonds. The transaction is a securitisation of residential mortgage loans originated by multiple originators in Japan. The rating actions are listed below.

JPY2.39bn* Class S1 bonds affirmed at 'AA+sf'; Outlook Stable
JPY1.03bn* Class S2 bonds affirmed at 'AA+sf'; Outlook Stable
*as of 26 November 2015

KEY RATING DRIVERS
The affirmations reflect Fitch's view that the transaction structure and asset performance are commensurate with the current ratings.

Of the four underlying beneficial interests (BIs) backed by their respective mortgage loan pools, three are senior BIs supported by subordination. The credit enhancement level of each senior BI has continued to increase and all are considered by Fitch to be well-protected against potential future performance deterioration. Also, as per transaction documentation, excess spread in the Hydra V Trust is available to redeem bonds through the BIs issued from the trust, providing additional support to the bonds. In addition to its published rating criteria listed below, Fitch's analysis also incorporated Japan-specific assumptions in applying APAC Residential Mortgage Criteria, such as frequency of foreclosure assumptions based on loan-to-value and debt-to-income ratios as well as loss severity for each underlying mortgage loan.

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. However, the possibility of a downgrade is considered remote as the bonds would be able to maintain the current ratings even if Fitch's default assumptions were more than six times higher than currently assumed in the agency's 'AA+sf' stress scenario. The chance of an upgrade is limited due to the documented account bank trigger in this transaction.

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 originators of the remaining underlying residential mortgage loan pools are The Tottori Bank, Ltd., ARUHI Corporation (formerly SBI Mortgage Co., Ltd.), Toyota Finance Corporation and Shinsei Property Finance Co., Ltd. The senior BIs backed by the residential mortgage pools originated by The Fukushima Bank, Ltd. and Bank of The Ryukyus, Ltd. have been fully redeemed.

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