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MTG ICU Trust Repo Series No.1 Class A Notes Rating Affirmed

MELBOURNE (S&P Global Ratings) June 22, 2023--S&P Global Ratings today affirmed its 'AAA (sf)' rating on the class A residential mortgage-backed securities (RMBS) issued by AMAL Trustees Pty Ltd. as trustee for MTG ICU Trust Repo Series No.1.

MTG ICU Trust Repo Series No.1 is a securitization of Australian-dollar loans, secured by mortgages over Australian properties originated by Illawarra Credit Union Ltd. The rating affirmation follows amendments to the transactions documents to allow, among other changes, an increase to the documented fixed-rate loans proportion to not exceed 20% of the outstanding balance of all mortgage loans.

The rating affirmation reflects the following factors:

  • Our view that the credit support provided to the class A notes is sufficient to withstand the stresses we apply. Credit support is provided by subordination, excess spread, and lenders' mortgage insurance on about 10.04% of the underlying mortgage portfolio. The credit support provided by note subordination exceeds our minimum assessed credit support at a 'AAA' level.
  • That the underlying collateral portfolio as of April 2023 consists of 483 consolidated loans totaling A$166.9 million, with a weighted-average current loan-to-value ratio of 52.1% and weighted-average loan seasoning of 29.7 months. Arrears remain relatively low, with a total of 0.26% of the collateral pool more than 30 days in arrears as of April 30, 2023.
  • That around 65.6% of the portfolio is secured by loans located in areas that S&P Global Ratings classifies as nonmetropolitan. Our view is that defaults on nonmetropolitan properties would be more frequent during periods of economic stress because of population and economic factors.
  • That 96.4% of the portfolio is backed by properties in New South Wales, representing a significant geographic-concentration risk. Our geographic-concentration limit for New South Wales is 60%, as per table 2 of our "Australian RMBS Rating Methodology And Assumptions" criteria, published on Sept. 1, 2011. Our view is that more clustered geographic distributions are at greater risk of being adversely affected by a localized economic downturn.
  • That liquidity support for senior expenses and rated note interest includes an amortizing liquidity reserve, equaling 1.5% of outstanding notes, and the ability to use principal draws.

Related Criteria

Related Research

Rating Affirmed

MTG ICU Trust Repo Series No.1
  • Class A, A$157.2 million: AAA (sf)
  • Class B, A$10.3 million: Not rated

REGULATORY DISCLOSURES

Please refer to the initial rating report for any additional regulatory disclosures that may apply to a transaction.

AUSTRALIA

S&P Global Ratings Australia Pty Ltd holds Australian financial services license number 337565 under the Corporations Act 2001. S&P Global Ratings' credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act).

Primary Credit Analyst:Edwin Tanuwidjaja, Melbourne +61 3 9631 2105;
edwin.tanuwidjaja@spglobal.com
Secondary Contact:Alisha Treacy, Melbourne + 61 3 9631 2182;
alisha.treacy@spglobal.com

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