Dilosk RMBS No.3 DAC Irish RMBS Notes Assigned Preliminary Ratings


  • One or more of the credit ratings was assigned by deviating from S&P Global Ratings' published criteria.
  • Dilosk RMBS No.3 DAC's issuance is an RMBS transaction backed by first-lien Irish buy-to-let mortgages.
  • We assigned our preliminary ratings to the class A, B-dfrd, C-dfrd,D-dfrd, and X1-dfrd notes.
  • The preliminary ratings reflect our view of the transaction's payment structure, cash flow mechanics, and the results of our cash flow analysis, among other factors.
DUBLIN (S&P Global Ratings) April 3, 2019--S&P Global Ratings today assigned 
its preliminary credit ratings to Dilosk RMBS No.3 DAC's (Dilosk 3's) class A, 
B-dfrd, C-dfrd, D-dfrd, and X1-dfrd notes. At closing, Dilosk 3 will also 
issue unrated class X2, Z1, Z2 and R notes.

Our preliminary ratings address the timely payment of interest and the 
ultimate payment of principal on the class A notes. Our preliminary ratings on 
the class B-dfrd, C-dfrd, D-dfrd, and X1-dfrd notes address the ultimate 
payment of interest and principal on these notes. 

Dilosk 3 is a securitization of a pool of first-ranking residential mortgage 
loans, secured on properties in Ireland originated by Dilosk DAC under the ICS 
Mortgages brand. Dilosk DAC will officially act as servicer for all of the 
loans in the transaction from the closing date, but effectively Link Asset 
Services Ltd. will be delegated the role.

Based on the origination criteria and process used we consider the mortgages 
to be prime mortgages, and there are no arrears at the time of our assigning 
the preliminary ratings. The Central Bank of Ireland's mortgage measures 
restrict the buy-to-let mortgage advance to 70% on a loan level, ensuring the 
weighted-average original loan-to-value ratio at a portfolio level is lower 
than that for other comparable European buy-to-let transactions.

Given that this pool comprises only buy-to-let mortgages, we have applied an 
exception from the foreclosure timing assumption of 42 months in our Irish 
residential mortgage-backed securities criteria. Buy-to-let mortgages are 
typically not subject to the same Code of Conduct on Mortgage Arrears 
regulations as owner-occupied mortgages, and given that the underlying loan 
contracts permit the direct appointment of a receiver, we assume that the 
issuer regains any recoveries 24 months after a payment default in our 
analysis.

Our preliminary ratings reflect our assessment of the transaction's payment 
structure, cash flow mechanics, and the results of our cash flow analysis to 
assess whether the notes would be repaid under stress test scenarios. The 
transaction's structure relies on a combination of subordination, excess 
spread, a senior liquidity reserve fund, a general reserve fund, and a 
principal borrowing mechanism to cover credit losses and income shortfalls. 
Having taken these factors into account, we consider the credit enhancement 
available to the rated notes to be commensurate with the preliminary ratings 
that we have assigned.
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