Fitch Affirms Ratings of 9 Illawarra RMBS Tranches

(The following statement was released by the rating agency)

SYDNEY, February 06 (Fitch) Fitch Ratings has affirmed the ratings of five 
Illawarra Series RMBS transactions. The transactions are securitisations of 
first-ranking Australian residential mortgages originated by IMB Limited (IMB). 
The rating actions are as follows:

Illawarra Series 2004-1 RMBS Trust:

AUD41.6m Class A-2 (ISIN AU300ILWC028) affirmed at 'AAAsf'; Outlook Stable; and

AUD12.5m Class B (ISIN AU300ILWC036) affirmed at 'BBsf'; Outlook Stable.

Illawarra Series 2005-1 RMBS Trust:

AUD53.1m Class A (ISIN AU300ILWD018) affirmed at 'AAAsf'; Outlook Stable; and

AUD13.0m Class B (ISIN AU300ILWD026) affirmed at 'BBsf'; Outlook Stable.

Illawarra Series 2006-1 RMBS Trust:

AUD83.7m Class A (ISIN AU3FN0000139) affirmed at 'AAAsf'; Outlook Stable; and

AUD12.5m Class B (ISIN AU3FN0000147) affirmed at 'BBsf'; Outlook Stable.

Illawarra Series 2010-1 RMBS Trust:

AUD110.8m Class A (ISIN AU3FN0010468) affirmed at 'AAAsf'; Outlook Stable; and

AUD11.0m Class AB (ISIN AU3FN0010476) affirmed at 'AAAsf'; Outlook Stable.

Illawarra Series 2013-1 RMBS Trust:

AUD229.9m Class A (ISIN AU3FN0018784) affirmed at 'AAAsf'; Outlook Stable.

KEY RATING DRIVERS 

The affirmations reflect Fitch's view that available credit enhancement is 
sufficient to support the notes' current ratings, and the agency's expectations 
of Australia's economic conditions. The sequential amortisation of the notes has 
resulted in improved credit enhancement for all senior notes. The credit quality 
and performance of the loans in the collateral pools have remained in line with 
Fitch's expectations.

At 30 November 2013, 30+ days arrears levels for all five Illawarra RMBS 
transactions were below Fitch's 30+days Dinkum Index of 1.19%. Illawarra Series 
2006-1 RMBS Trust had the highest level of arrears at 0.7%, while Illawarra 
Series 2010-1 RMBS Trust recorded no loans in 30+ days arrears. The transactions 
have experienced low levels of losses, with all losses being covered by lenders' 
mortgage insurance (LMI), or excess spread.

LMI is provided by QBE Lenders' Mortgage Insurance Limited (AA-/Stable), 
Genworth Financial Mortgage Insurance Pty Ltd, and Housing Loan Insurance 
Corporation. Of the five transactions, Illawarra Series 2006-1 RMBS Trust 
experienced the highest cumulative claims on LMI at 0.04% of the original 
balance, while Illawarra Series 2013-1 Trust has not experienced any losses to 
date.

All the pools are geographically concentrated in the New South Wales Illawarra 
region and Fitch has taken this into account in the pool analysis. All pools 
have benefitted from indexation, with Illawarra Series 2004-1 RMBS Trust 
experiencing the largest improvement to 39.5%, from 52.7% before indexation.

RATING SENSITIVITIES 

Unexpected increases in delinquencies, defaults and losses would be necessary 
before any negative rating action would be considered.

Sequential pay-down has increased credit enhancement for the senior notes of all 
transactions, which can withstand multiples of the latest reported arrears. The 
ratings of all the Illawarra RMBS transactions' Class A notes are independent of 
downgrades to the LMI providers' ratings.

Fitch's initial key rating drivers and rating sensitivities are further 
discussed in the new issue reports entitled 'Illawarra Series 2010?1 RMBS 
Trust', dated 06 April 2010, and 'Illawarra Series 2013-1 RMBS Trust', dated 15 
May 2013 available on www.fitchratings.com.

Contacts:

Lead Surveillance Analyst

Hai Duong Le

Analyst

+61 2 8256 0358

Fitch Australia Pty Ltd., Level 15, 77 King St, Sydney, NSW 2000

Committee Chairperson

Natasha Vojvodic

Senior Director

+61 2 8256 0350

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 given under Related Research below.

The source of information used to assess these ratings was the servicer (IMB 
Limited). The issuer has informed Fitch that not all relevant underlying 
information used in the analysis of the rated notes is public.

Applicable criteria, "Global Structured Finance Rating Criteria", dated 24 May 
2013; "Counterparty Criteria for Structured Finance and Covered Bonds", dated 13 
May 2013; "Counterparty Criteria for Structured Finance and Covered Bonds: 
Derivative Addendum", dated 13 May 2013; "Global Criteria for Lenders' Mortgage 
Insurance in RMBS" dated 1 August 2013; "APAC Residential Mortgage Criteria", 
dated 1 August 2013; and "APAC Residential Mortgage Criteria Addendum - 
Australia", dated 1 August 2013, are available at www.fitchratings.com.

Related Research 

"Representations, Warranties and Enforcement Mechanisms in Global Structured 
Finance Transactions", dated April 17 2012.

Media Relations: Iselle Gonzalez, Sydney, Tel: +61 2 8256 0326, Email: 
iselle.gonzalez@fitchratings.com.

Individual representations, warranties, and enforcement mechanisms reports are 
available for all structured finance transactions initially rated on or after 26 
September 2011 at www.fitchratings.com.

Applicable Criteria and Related Research: 

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=708661

Counterparty Criteria for Structured Finance and Covered Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=707155

Counterparty Criteria for Structured Finance and Covered Bonds: Derivative 
Addendum

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=707156

Global Criteria for Lenders’ Mortgage Insurance in RMBS

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=709255

APAC Residential Mortgage Criteria - Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=709855

APAC Residential Mortgage Criteria Addendum – Australia - Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=710259

Additional Disclosure 

Solicitation Status 

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=819891

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: 
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING 
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S 
FREE WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND 
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF 
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, 
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF 
CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE 
SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS 
SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED 
ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH 
WEBSITE.

Fitch Australia Pty Ltd holds an Australian financial services licence (AFS 
licence no. 337123) which authorises it to provide credit ratings to wholesale 
clients only. Credit ratings information published by Fitch is not intended to 
be used by persons who are retail clients within the meaning of the Corporations 
Act 2001.