Thursday, March 4, 2010

Overall Performance Of Australian ABS Transactions Remains Resilient, S&P Report Says

MELBOURNE (Standard & Poor's) March 1, 2010--Australian asset-backed securities (ABS) continue to perform within Standard & Poor's Ratings Services' expectations, with no rating actions occurring in the fourth quarter of 2009. Overall in 2009, Australian ABS transactions demonstrated resilience under difficult market conditions, with upgrades (four) outweighing downgrades (two). This key finding was published by Standard & Poor's in a report titled Australia & New Zealand ABS Performance Watch, for the quarter ended Dec. 31, 2009.

"Although rising interest rates may lead to moderately higher arrears in some underlying ABS transactions in 2010, we do not expect the rise in arrears to cause widespread rating actions," Standard & Poor's credit analyst Alisha Treacy said. "We expect the negative effect of any moderate rises in portfolio arrears to be offset by higher credit support as a proportion of outstanding balances due to rapid portfolio amortization, especially for senior ranking notes. Nevertheless, we expect the subordinated classes of notes to be more exposed to losses if the excess spread in the transaction isn't sufficient to cover all the losses experienced."

Issuance volumes for the Australian ABS market remained subdued for the three months to Dec. 31, 2009. The only issuance in the final quarter of 2009 andthe largest for the year was the A$866.7 million Bella Trust Series 2009-1 transaction. Total ABS issuance rated by Standard & Poor's fell to A$1.7 billion in 2009, from A$3.7 billion in 2008. Standard & Poor's expects issuance in the Australian ABS market to remain subdued in 2010, compared with the issuance peak in 2007 of A$5.9 billion. About A$13 billion of ABS notes were outstanding at Dec. 31, 2009.

Australia & New Zealand ABS Performance Watch, for the quarter ended Dec. 31, 2009, provides a comprehensive analysis of the performance of term ABS transactions in Australia and gives valuable insight into the performance of the programs' underlying assets and securities. The report is produced on a quarterly basis and provides comparative data on each program. The report is available on Ratings Direct and Standard & Poor's Web site at www.standardandpoors.com.au.

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