OREANDA-NEWS. March 22, 2016. Fitch Ratings has affirmed the rating for SMHL Series 2008-1's Class A notes at 'AAAsf'. The Outlook is Stable. The transaction is a securitisation of first-ranking Australian conforming residential mortgages originated by Members Equity Bank Limited (ME Bank). The rating is as follows:

AUD1,981.2m Class A (ISIN AU3FN0007605) notes affirmed at 'AAAsf'; Outlook Stable.

KEY RATING DRIVERS
The affirmation reflects Fitch's view that the 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 also remain in line with expectations.

At 15 February 2016, 30+ days arrears stood at 1.48%, above Fitch's 3Q15 Dinkum Index of 0.91%. There have been eight foreclosures since issuance, resulting in a loss of AUD178,525. Lenders' mortgage insurance (LMI) covered approximately 99.9% of realised losses, with the remaining amount covered by excess spread. The underlying portfolio has 56.1% LMI coverage provided by Genworth Financial Mortgage Insurance Pty Limited (Insurer Financial Strength Rating: A+/Stable).

RATING SENSITIVITIES
Fitch's 'AAAsf' breakeven default rate is 9.94% and the transaction is sensitive to increases in defaults. The Class A notes are LMI dependent and are sensitive to LMI provider downgrades.

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 ME Bank compared to its 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.

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 under Related Research below.