Powered by MOMENTUM MEDIA
Mortgage business logo

Westpac receives Aaa credit rating

Westpac has been assigned a Aaa long-term rating over its mortgage-covered bonds from Moody’s Investors Service, reflecting the overall credit strength of the big four bank.

In assigning the rating to Westpac’s Series 2015-C5 mortgage bonds, Moody’s said the credit quality of the assets backing the covered bonds was a significant factor.

“The covered bonds are backed by Australian residential mortgage loans. The collateral score for the cover pool is 6.34 per cent,” the credit ratings agency said.

Moody’s said the legal framework of Westpac’s mortgage-covered bond program, as well as the cover pool’s exposure to market risk – which is 16.21 per cent – were also taken into account.

“As at 30 April 2015, the total value of the assets included in the cover pool is $35.0 billion, comprising $34.1 billion in residential mortgage loans and $0.9 billion in substitute assets,” it said.

“The residential mortgage loans have a weighted-average (WA) seasoning of 55 months and a WA current unindexed loan-to-value ratio of 61.3 per cent.”

Moody’s said its rating addresses the expected loss posed to investors, which is 20.5 per cent for the cover pool.

md discover

The ratings agency added that a change in the level of the covered bond “anchor” – the probability that an issuer will cease making payments under the covered bonds – could lead to a downgrade in the rating of the covered bonds.

Share this article
brokerpulse

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

brokerpulse graph

What are the main barriers to securing a mortgage at the moment?