Firstmac assigned AAA ratings for RMBS

Non-bank lender Firstmac has received AAA credit ratings for four classes of its prime residential mortgage-backed securities (RMBS).

Standard & Poor’s (S&P) assigned the ratings for Firstmac’s A-1a, A-1b, A-2 and AB classes of RMBS, which are issued by Firstmac Fiduciary Services as a trustee for Firstmac Mortgage Funding Trust No.4 Series 2-2015.

S&P said the ratings reflect its view that the credit support is sufficient to withstand the stresses that the credit ratings agency applies.

“This credit support comprises lenders’ mortgage insurance to 54.8 per cent of the portfolio, which covers 100 per cent of the face value of these loans, accrued interest, and reasonable costs of enforcement, as well as note subordination for all rated notes,” it said.

S&P said the ratings also reflects its view of the underwriting standards, centralised approval processes and servicing standards of Firstmac, as well as the “extraordinary” expense reserve of $150,000 funded by the non-bank lender.

“The reserve will be topped up via excess spread if drawn,” it added.

The credit ratings agency also noted that the fixed-to-floating interest-rate swap provided by ANZ to hedge the mismatch between receipts from fixed-rate mortgage loans and the variable-rate RMBS was a positive factor in determining the ratings.

Firstmac completed a $500 million RMBS deal earlier this month despite citing difficult market conditions of late.

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