The non-bank lender received the ratings for its A1-a, AR-u and A2 classes of RMBS to be issued by Permanent Custodians as a trustee of Pepper Residential Securities Trust No. 16.
S&P said its ratings reflect the credit risk of the underlying collateral portfolio, including its view that the credit support is sufficient to withstand the stresses that the credit agency applies.
The underwriting standard and centralised approval process of the seller (Pepper) was another significant factor in determining the ratings, according to S&P.
“Our expectation that the various mechanisms to support liquidity within the transaction, including a liquidity facility equal to 2.5 per cent of the outstanding balance of the notes, and principal draws, are sufficient under our stress assumptions to ensure timely payment of interest,” it added.
[Related: Pepper announces ‘landmark transaction’]