The quality of the mortgage collateral in cover pools in the four largest issuer countries in the Asia Pacific region is expected to remain strong and stable, according to ratings agency Moody's Investor Service. Moody's said Australian and New Zealand covered bonds would remain "strong" in 2017, underpinned by the high sovereign credit quality of the two countries, and the credit quality of bank issuers.This is despite the ratings agency's negative outlooks on the four major Australian banks and their New Zealand subsidiaries, said Jennifer Wu, a Moody's associate managing director and a co-author of the report.  She noted that both countries are rated Aaa with stable outlooks."The quality of the mortgage collateral in cover pools will weaken slightly with the inclusion of a greater proportion of riskier loans originated over the past three to four years," said Wu."These mortgages are more vulnerable to economic or housing market shocks because of rapid property price appreciation and rising household debt over this period." In Korea, the credit quality of covered bonds will also be strong and stable in 2017, supported by the high credit quality of the issuers and the country's sovereign strength, according to Yian Ning Loh, a Moody's senior vice president and another co-author of the report. "Furthermore, the credit quality of the residential mortgage collateral in Korean cover pools will be good in 2017. Such mortgages have low average loan-to-value ratios of 40 per cent to 65 per cent, below the 70 per cent maximum required under Korean regulations," said Loh.The credit quality of Singapore covered bonds will also be strong and stable in 2017, supported by the high credit quality of the issuers and the country's sovereign strength. Moody's rates Singapore at Aaa with a stable outlook.The credit quality of the residential mortgage collateral in Singapore cover pools will be "good" in 2017 and such mortgages have low average LTV ratios of 50 to 60 per cent.