OREANDA-NEWS. Fitch Ratings has affirmed 38 classes of notes issued through 14 FirstMac RMBS transactions and has also affirmed FirstMac Mortgage Funding Trust Series 1E-2007's Class A-1 notes' currency swap obligation. All transactions are backed by pools of conforming Australian residential mortgages sourced directly or by way of third-party introducers. The mortgages were originated in the name of nominee companies on behalf of the trustee, FirstMac Fiduciary Services Pty Ltd, and sold to the various trusts through FirstMac warehouses. A full list of rating actions can be found at the end of this commentary.

KEY RATING DRIVERS
The affirmations reflect Fitch's view that available credit enhancement supports the notes at their current ratings, the agency's expectations of Australia's economic conditions, and that the credit quality and performance of the underlying loans have remained within the agency's expectations.

All transactions are paying down on a sequential basis with principal collections being allocated to the senior notes with the exception of FirstMac Bond Series 1C-2006, FirstMac Mortgage Funding Trust Series 1E-2007, FirstMac Mortgage Funding Trust Series 1-2010, and the Class A and AB notes in FirstMac Bond Series 2-2005 Trust and FirstMac Mortgage Funding Trust Series 1-2007 which are currently paying pro-rata. The amortisation of the notes has resulted in improvements in credit enhancement since closing.

As at end-December 2014, 30+ days arrears ranged between 0.05% for FirstMac Mortgage Funding Trust Series 2E-2013 and 4.3% for FirstMac Bond Series 2-2005 Trust. Since closing, across the 14 Firstmac transactions rated by Fitch, 199 loans have defaulted, resulting in zero losses across the outstanding Fitch rated notes. Lenders' mortgage insurance (LMI) has covered 86% of the principal shortfall, with the remainder being covered by excess spread or by the originator. No performance data has been received to date for FirstMac Mortgage Funding Trust No.4 Series 3PP-2014, which was issued on 17 December 2014.

The reported weighted average (WA) current loan-to-value ratio (LVR) ranged from 57.7% (FirstMac Mortgage Funding Trust Series 1E-2007) to 74.8% (FirstMac Bond Series 1C-2006). FirstMac Bond Series 2-2005 Trust benefitted the most from indexation with WA LVR improving to 56.26%, down from 68.11%. FirstMac Mortgage Funding Trust Series 1E-2007 recorded the lowest indexed WA LVR at 48.4%.

The pools contain a significant portion of loans collateralised by investment properties, ranging from 38.4% (Firstmac Mortgage Funding Trust No. 4 Series 3-PP-2014) to 67.3% (FirstMac Mortgage Funding Trust Series 1-2007). The portion of interest-only loans is also relatively high, ranging from 28.7% (FirstMac Bond Series 2-2005) to 72.9% (FirstMac Bond Series 1C-2006).

All transactions have LMI provided by one or more of the following insurers: QBE Lenders' Mortgage Insurance Limited (Insurer Financial Strength rating: AA-/Stable); or Genworth Financial Mortgage Insurance Pty Ltd (Insurer Financial Strength rating: A+/Stable). No transactions have experienced any losses to date.

RATING SENSITIVITIES
The sequential pay-down has improved credit enhancement for senior notes, especially for well-seasoned transactions. As at end-December 2014, the senior notes could withstand multiples of latest-reported arrears. Class A notes remain independent of a downgrade to the LMI provider's rating. Class AB notes of recently originated transactions remain sensitive to any change in the LMI provider's ratings.

The 'AAAsf' modelled loss severities after LMI ranged between 22% and 37%, with the senior notes of each transaction able to withstand default rates of between 1% and 100%, with LMI, at the current modelled 'AAAsf' loss severities levels. This analysis excludes credit to excess spread, which has been strong and stable in each of the transactions. As a result, Fitch considers that the likelihood of any of the notes currently rated 'AAAsf' being downgraded remote.

The ratings of the Fitch-rated Class B notes are unlikely to see negative ratings action unless excess spread levels reduce dramatically, or FirstMac does not call transactions.

The 'F1+sf' rating of FirstMac Mortgage Funding Trust No.4 Series 1A-2014's Class A-2A notes is linked to the Short-Term rating of National Australia Bank Limited (AA-/Stable/F1+).

Fitch's key rating drivers and rating sensitivities are further discussed in the new issue reports listed under 'Related Research', and available on www.fitchratings.com. Included as appendices to the reports are descriptions of the representations, warranties, and enforcement mechanisms.

The full list of rating actions is as follows:

FirstMac Bond Series 2-2005 Trust:
AUD56.8m Class A1 notes (ISIN AU300FMA5015) affirmed at 'AAAsf'; Outlook Stable;
AUD3.2m Class AB notes (ISIN AU300FMA5023) affirmed at 'AAAsf'; Outlook Stable; and
AUD16.5m Class B notes (ISIN AU300FMA5031) affirmed at 'BBsf'; Outlook Stable.

FirstMac Bond Series 1E-2006 Trust:
EUR48.1m Class A notes (ISIN XS0250012498) affirmed at 'AAAsf'; Outlook Stable; and
AUD50.5m Class B notes (ISIN AU300FMA9017) affirmed at 'BBsf'; Outlook Stable.

FirstMac Bond Series 1C-2006:
AUD103.8m Class A notes (ISIN AU3FN0010708) affirmed at 'AAAsf'; Outlook Stable.

FirstMac Mortgage Funding Trust Series 1-2007:
AUD109.4m Class A notes (ISIN AU0000FMAHA0) affirmed at 'AAAsf'; Outlook Stable;
AUD13.4m Class AB notes (ISIN AU3FN0001889) affirmed at 'AAAsf'; Outlook Stable; and
AUD27.0m Class B notes (ISIN AU3FN0001897) affirmed at 'BBsf'; Outlook Stable.

FirstMac Mortgage Funding Trust Series 1E-2007:
EUR46.1m Class A1 notes (ISIN XS0305486127) affirmed at 'AAAsf'; Outlook Stable;
Class A-1 Currency Swap Obligation affirmed at 'AAAsf'; Outlook Stable;
AUD124.6m Class A2 notes (ISIN AU3FN0003026) affirmed at 'AAAsf'; Outlook Stable; and
AUD13.2m Class B notes (ISIN AU3FN0003018) affirmed at 'BBsf'; Outlook Stable.

FirstMac Mortgage Funding Trust Series 1-2010:
AUD4.9m Class A-2 notes (ISIN AU3FN0011433) affirmed at 'AAAsf'; Outlook Stable;
AUD173.7m Class A-3 notes (ISIN AU3FN0011441) affirmed at 'AAAsf'; Outlook Stable; and
AUD23.6m Class AB notes (ISIN AU3FN0011458) affirmed at 'AAAsf'; Outlook Stable.

FirstMac Mortgage Funding Trust Series 2-2011:
AUD84.2m Class A-2 notes (ISIN AU3FN0014775) affirmed at 'AAAsf'; Outlook Stable;
AUD87.7m Class A-3 notes (ISIN AU3FN0014783) affirmed at 'AAAsf'; Outlook Stable; and
AUD11.7m Class AB notes (ISIN AU3FN0014791) affirmed at 'AAAsf'; Outlook Stable.

FirstMac Mortgage Funding Trust Series 1-2012:
AUD36.2m Class A-1 notes (ISIN AU3FN0016127) affirmed at 'AAAsf'; Outlook Stable;
AUD131.1m Class A-2 notes (ISIN AU3FN0016135) affirmed at 'AAAsf'; Outlook Stable; and
AUD13.4m Class AB notes (ISIN AU3FN0016143) affirmed at 'AAAsf'; Outlook Stable.

FirstMac Mortgage Funding Trust RMBS Series 3-2012:
AUD187.6m Class A-1 notes (ISIN AU3FN0017570) affirmed at 'AAAsf'; Outlook Stable;
AUD73.0m Class A-2 notes (ISIN AU3CB0203313) affirmed at 'AAAsf'; Outlook Stable; and
AUD18.5m Class AB notes (ISIN AU3FN0017588) affirmed at 'AAAsf'; Outlook Stable.

FirstMac Mortgage Funding Trust Series 1E-2013:
AUD172.8m Class A-1 notes (ISIN AU3FN0019436) affirmed at 'AAAsf'; Outlook Stable;
GBP92.0m Class A-2 notes (ISIN XS0942504639) affirmed at 'AAAsf'; Outlook Stable; and
AUD22.0m Class AB notes (ISIN AU3FN0019279) affirmed at 'AAAsf'; Outlook Stable.

FirstMac Mortgage Funding Trust Series 2E-2013:
AUD124.4m Class A-1 notes (ISIN AU3FN0020939) affirmed at 'AAAsf'; Outlook Stable; and
GBP85.0m Class A-2 notes (ISIN XS0993136174) affirmed at 'AAAsf'; Outlook Stable.

FirstMac Mortgage Funding Trust No.4 Series 1A-2014:
AUD228.8m Class A-1 notes (ISIN AU3FN0023453) affirmed at 'AAAsf'; Outlook Stable;
USD270.0m Class A-2A notes (ISIN USQ3873CAA10) affirmed at 'F1+sf';
AUD0m Class A-2R notes affirmed at 'AAAsf'; Outlook Stable; and
AUD27.8m Class A-3 notes (ISIN AU3FN0023461) affirmed at ' AAAsf '; Outlook Stable.

Firstmac Mortgage Funding Trust No. 4 Series 2-2014:
AUD253.3m Class A-1 notes (ISIN AU3FN0024618) affirmed at 'AAAsf'; Outlook Stable;
AUD280.0m Class A-2 notes (ISIN AU3FN0024626) affirmed at 'AAAsf'; Outlook Stable; and
AUD29.6m Class A-3 notes (ISIN AU3FN0024634) affirmed at 'AAAsf'; Outlook Stable.

Firstmac Mortgage Funding Trust No. 4 Series 3PP-2014:
AUD595.0m Class A-1 notes (ISIN AU3FN0016127) affirmed at 'AAAsf'; Outlook Stable; and
AUD35.0m Class A-2 notes (ISIN AU3FN0016135) affirmed at 'AAAsf'; Outlook Stable.