Fitch Affirms Ratings of SMHL Series 2008-1 Fund

(The following statement was released by the rating agency)

SYDNEY, March 20 (Fitch) Fitch Ratings has affirmed the ratings of SMHL Series 
2008-1 Fund's Class A notes at AAAsf. The transaction is a securitisation of 
first-ranking Australian conforming residential mortgages originated by Members 
Equity Bank Pty Ltd (ME Bank). The rating action is as follows:

AUD1,581.2m Class A (ISIN AU3FN0007605) notes affirmed at 'AAAsf'; Outlook 
Stable.

KEY RATING DRIVERS

The affirmation reflects Fitch's view that available credit enhancement is 
sufficient to support the notes' current ratings, the agency's expectations of 
Australia's economic conditions, and the credit quality and performance of the 
loans in the collateral pool have remained in line with expectations. The 
transaction remains within its substitution period with principal collections 
being used to purchase additional receivables.

The transaction's performance has been within Fitch's expectations, with low 
levels of defaults and arrears. As at 15 February 2014, 30+ days arrears stood 
at 0.63%, below the Fitch's 4Q13 Dinkum Prime Index of 1.21%. There have been 
four foreclosures since issuance, resulting in a loss of AUD87,276, fully 
covered by lenders' mortgage insurance (LMI).

71% of the underlying portfolio is covered by LMI, provided by Genworth 
Financial Mortgage Insurance Pty Ltd and Housing Loan Insurance Corporation, 
covering 70.6% and 0.4% of the pool respectively.

SMHL Series 2008-1 Fund's revolving period ends in Feb 2019. Fitch is 
comfortable with the long revolving period because portfolio stratifications 
have not changed significantly since closing, ME Bank's product mix has not 
materially changed over this time, and the portfolio is performing as expected.

RATING SENSITIVITIES

The ratings are LMI dependent and are sensitive to downgrades to the LMI 
provider's ratings. 

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      

The source of information used to assess these ratings was the servicer, Members 
Equity Bank Pty Ltd. 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 "Global Criteria for Lenders' Mortgage Insurance in RMBS" dated 1 August 
2013; "APAC Residential Mortgage Criteria" dated 1 August 2013,  "APAC 
Residential Mortgage Criteria Addendum - Australia", dated 1 August 2013; 
"Counterparty Criteria for Structured Finance and Covered Bonds", dated 13 May 
2013 and "Counterparty Criteria for Structured Finance and Covered Bonds: 
Derivative Addendum", dated 13 May 2013, are available at www.fitchratings.com.

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

Additional information is available 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

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

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

Additional Disclosure 

Solicitation Status 

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=824517

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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.