Moody's completes its review of Australian RMBS
In the structured finance sector, Moody's downgraded the insurance financial strength rating assigned to MGIC Australia Pty Limited to 'Ba2' from 'A2' and left the rating with a stable outlook.
The IFSR on its parent, Mortgage Guaranty Insurance Corporation, was lowered to
'Ba2/Developing' on February 13. The IFSR assigned to MGIC Australia allows for the slowing economy, weakening housing market and rising unemployment.
The move is likely to have little impact on Australian RMBS issues, given the very small and recent presence of MGIC Australia in the market. However, Moody's reviewed its ratings on all Australian RMBS issues following the downgrading of Genworth Australia's IFSR rating to 'A1/Negative' the week before.
As it was, the 'Aaa' ratings on the Class A notes issued by SMHL Warehousing Trust 2004-1, SMHL Private Placement Trust 2008-2 and RAMS Mortgage Securities Trust Series Unicredit (1) that had been placed on review for possible downgrade in January, as a result of the same action on Genworth Australia, were affirmed.
But the ratings on a further 22 junior notes from various RMBS issues, for which Genworth Australia is the primary mortgage insurer, were lowered to 'A1' from 'Aa3'. And another 76 junior notes that were downgraded in July as a result of the downgrade of QBE Lenders Mortgage Ltd (formally PMI Mortgage Insurance Ltd) but left on review pending the finalisation of the Genworth Australia review, saw their ratings lowered again to 'A1' from 'Aa3'.
Moody's also took the opportunity to affirm the 'Aa3' rating on the Challenger Millennium Warehouse H Trust, Class A notes, the 'Aa1' on the RESIMAC Triomphe Trust Warehouse Series No.1 Class AB notes, and the 'Aa1' rating on the TORRENS Series 2008-2(W) Trust Class AB notes.
S&P lowered its counterparty credit and financial strength ratings on Genworth Australia to 'AA-' from 'AA', on Friday. The rating outlook is stable.
The downgrade was in response to downgrades made to the US Genworth Life insurance companies which moved the rating on Genworth Australia outside of a maximum two notch differential.
Finally, in response to further deterioration in the performance of the underlying receivables pool for the Mobius ELR-01 Trust, Moody's downgraded the rating on the Class A notes to 'Ba1' from 'A3' and left the rating on review for further possible downgrade. It also lowered the ratings on the Class B, Class C and Class D notes to 'Ca' from 'B3', 'C' from 'Ca' and 'C' from 'Ca', respectively.
Moody's expressed some concern with regard to the financial pressures faced by the sub-originators and primary servicers of the receivables securitised through the transaction. Moody's also assigned a negative outlook on the Australian asset-backed securities sector at the start of February and said the current economic environment makes several elements of Mobius ELR-01 Trust structure vulnerable to significant performance volatility.