Rating On Murray Trust Repo Series No.1 Class A RMBS Affirmed After Additional Note Issuance

MELBOURNE (S&P Global Ratings) March 14, 2019--S&P Global Ratings today 
affirmed its 'AAA (sf)' rating on the class A residential mortgage-backed 
securities (RMBS) issued by Perpetual Ltd. as trustee for Murray Trust Repo 
Series No.1.

The rating affirmation follows the issuance of an additional A$31.7 million of 
class A notes and a reduction of A$0.4 million of class B notes, bringing the 
aggregate amount of class A and class B notes issued to approximately A$162.6 
million. The proceeds from the note issuance will be used to fund the 
acquisition of additional loans, as contemplated in the transaction structure. 

The affirmation reflects:
  • The credit risk of the underlying collateral portfolio, which includes a weighted-average current loan-to-value ratio of 63.6% and weighted-average loan seasoning that exceeds five years.
  • The support provided for the class A notes in the form of lenders' mortgage insurance (LMI) policies on 40.1% of the pool of mortgages and subordination provided by the class B notes, which exceed the level of credit support commensurate with a 'AAA (sf)' rating.
  • The geographical concentration of the pool, where 64.8% of the collateral pool originates from three postcodes in the Albury-Wodonga area, according to our analysis, reflecting Hume Bank Ltd.'s branch footprint. Our view is that clustered geographic distributions are potentially at greater risk of being adversely affected by a localized economic downturn. We consequently apply a greater stress to location concentrations.
  • The heavy concentration of the pool to security properties that we classify as nonmetropolitan, at 97.3%. Our view is that defaults on nonmetropolitan properties could be more frequent during periods of economic stress because of population and economic factors. We have increased the default frequency in the pool to reflect this concentration and assumed a longer realization period for loans secured by nonmetropolitan properties to reflect the weaker employment trends and longer selling periods that tend to occur in nonmetropolitan areas.
  • Our expectation that the liquidity reserve--equal to 2.5% of the notes outstanding within the transaction--is adequate under our stress assumptions to cover timely payment of interest.
  • Hume Bank's underwriting standards, processes, and servicing quality, which are consistent with industrywide practices.
  • The fact that there is no swap in this transaction. All loans acquired by the trust must be variable rate. Hume Bank can convert variable-rate loans in the pool to fixed rate, provided the aggregate percentage of the pool (by balance) that is fixed rate does not exceed 2%. A total of 1.01% of the current pool consists of fixed-rate loans.
Class     Rating
A         AAA (sf)
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