Ratings On Two Classes From Two APOLLO Series Transactions Lowered And Removed From CreditWatch Negative

MELBOURNE (S&P Global Ratings) Sept. 3, 2019--S&P Global Ratings today lowered 
its ratings on the class B2 notes issued by APOLLO Series 2013-1 Trust (2013-1 
Trust) and APOLLO Series 2015-1 Trust (2015-1 Trust) (see list).

At the same time, we removed the ratings from CreditWatch, where we had placed 
them with negative implications on July 30, 2019 (see "Various Australian RMBS 
Ratings Placed On CreditWatch Negative Following Downgrade Of Lenders' 
Mortgage Insurers," published July 30, 2019). Additionally, we affirmed our 
ratings on the class AB and class B1 notes issued by 2013-1 Trust and removed 
the ratings from Creditwatch Negative. We also affirmed our ratings on four 
other classes of notes issued by both transactions. The transactions are 
backed by residential mortgage loans originated and serviced by Suncorp Metway 
Ltd.

The rating downgrades on the class B2 notes from both transactions is driven 
by the lowering of our rating to 'A' from 'A+' on QBE Lenders' Mortgage 
Insurance Ltd. (QBE). QBE is the lenders' mortgage insurer to all the loans in 
each of these transactions and forms credit support to the notes.

Our opinion is that an insurer's capacity to pay is lower for an 'A' rated 
insurer than an 'A+' rated insurer, and results in us assigning less credit to 
lenders' mortgage insurance (LMI) for RMBS ratings higher than 'A' (see "
Methodology For Assessing Mortgage Insurance And Similar Guarantees And 
Supports In Structured And Public Sector Finance And Covered Bonds," published 
Dec. 7, 2014).

As a result, the minimum credit support at a given rating level for a rated 
note, after considering LMI, is higher if the LMI provider is rated 'A' than 
if it is rated 'A+'.

The rating action on the class B2 notes issued by 2013-1 Trust reflects that 
while the cash flow in the structure is strong, and shows sufficient excess 
spread to cover losses at the 'AA-' level, the excess spread is only trapped 
after the call date and is not available to cover losses; therefore, the 
magnitude of reliance on monthly excess spread for the class B2 notes 
constrains the rating at 'A+'. Excess spread is a soft form of credit 
enhancement, and can be volatile and subject to event risk. There is no hard 
credit support provided to the class B2 notes, for which credit support 
consists of LMI and excess spread.

The rating action on the class B2 notes issued by 2015-1 Trust reflects that 
there is insufficient credit support provided at a 'AA-' rating level. The 
class B3 notes act as note subordination to the class B2 notes as a form of 
credit support for the class B2 notes. As of May 31, 2019, the credit support 
provided to the class B2 notes was 0.42%, which is commensurate with an 'A+' 
rating level. The cash flow in the structure is strong, and while there is 
excess spread trapped in the transaction, it is not available to cover losses. 
Credit support for these notes is provided by note subordination, LMI, and 
excess spread.

The rating affirmation on the class B1 notes issued by 2013-1 Trust reflects 
that while credit support provided (in the form of note subordination) is 
commensurate with a higher rating level, the rating on the notes is restricted 
because the class B1 and class B2 notes pay principal on a pari passu basis 
(based on the stated balance of the notes). As the amount of credit support 
provided to this note will reduce over time, it is sensitive to tail-end 
losses and this limits its rating to 'AA-'.

The rating affirmations on the class A and class AB notes issued by 2013-1 
Trust and the class A, class AB, and class B1 notes issued by 2015-1 Trust 
reflect that there is sufficient credit support provided to these notes at 
their current rating level after taking into account QBE's rating downgrade. 
The notes also pass our cash-flow modeling stresses at their respective rating 
levels. Credit support for these notes is provided by note subordination, LMI, 
and excess spread.
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