Fitch Rates Westpac's Series 2014-C2 EUR1bn Covered Bonds 'AAA'/Stable <Origin Href="QuoteRef">WBC.AX</Origin>

(The following statement was released by the rating agency)

SYDNEY, March 24 (Fitch) Fitch Ratings has assigned Westpac Banking 
Corporation's (WBC, AA-/Stable/F1+) Series 2014-C2 issue of EUR1bn mortgage 
covered bonds a rating of 'AAA'. The Outlook is Stable. The fixed-rate bond is 
due in March 2021 and benefits from a 12-month extendable maturity. 

KEY RATING DRIVERS

The rating is based on WBC's Long-Term Issuer Default Rating (IDR) of 'AA-', a 
Discontinuity Cap (D-Cap) of 2 (high), and an asset percentage (AP) of 89.0%, 
which is lower than Fitch's breakeven AP for a 'AAA' rating of 89.5%, supporting 
a 'AA' rating on a probability of default (PD) basis and a 'AAA' rating after 
giving credit for recoveries. The Outlook on the covered bonds reflects the 
Stable Outlook on WBC's IDR.

At end-February 2014, the cover pool consisted of 106,814 loans secured by 
first-ranking mortgages of Australian residential properties with a total 
outstanding balance of AUD25.8bn and AUD4.2bn of cash. 

Maturity mismatches are significant, with the weighted-average residual life of 
the cover assets at 15.6 years, and of the liabilities at 4.1 years. 

RATING SENSITIVITIES

The 'AAA' rating would be vulnerable to a downgrade if the issuer's Long-Term 
IDR were downgraded by two or more notches; the D-Cap fell by more than one 
category; or the programme's AP rose above the breakeven AP of 89.5%.

Fitch is in the process of implementing its recently updated covered bonds 
criteria to reflect the beneficial position for covered bonds under bank 
resolution frameworks where covered bonds are exempted from bail-in. The course 
of implementation will take place as described in the report entitled "Feedback 
Report: Covered Bond Rating Change - Developments in Bank Resolution Frameworks 
Beneficial", listed below.

Contacts:

Primary Analyst

Claire Heaton

Director 

+61 2 8256 0361

Fitch Australia Pty Ltd., level 15, 77 King Street, Sydney NSW 2000

Secondary Analyst

James Leung

Director

+61 2 8256 0322

Committee Chairperson

Ben McCarthy

Managing Director

+61 2 8256 0388

The source of information used to assess these ratings was Westpac Banking 
Corporation. The issuer has informed Fitch that not all relevant underlying 
information used in the analysis of the rated bonds is public.

Applicable criteria, 'Covered Bonds Rating Criteria', dated 10 March 2014; 
'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 ; and 'APAC Residential Mortgage 
Criteria', dated 1 August 2013; 'APAC Residential Mortgage Criteria Addendum - 
Australia', dated 1 August 2013; 'Covered Bonds Rating Criteria - Mortgage 
Liquidity & Refinance Stress Addendum' dated 7 February 2014; 'Global Criteria 
for Lender's Mortgage Insurance in RMBS', dated 1 August 2013, are available at 
www.fitchratings.com.

Related research:

"Feedback Report: Covered Bond Rating Change - Developments in Bank Resolution 
Frameworks Beneficial", dated 10 March 2014.

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: 

Counterparty Criteria for Structured Finance and Covered Bonds: Derivative 
Addendum

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

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

Covered Bonds Rating Criteria – Mortgage Liquidity and Refinancing Stress 
Addendum

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=719757

Global Criteria for Lenders’ Mortgage Insurance in RMBS

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

Feedback Report: Covered Bond Rating Criteria Change

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=738918

Covered Bonds Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=738975

Counterparty Criteria for Structured Finance and Covered Bonds

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

Additional Disclosure 

Solicitation Status 

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=824853

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