OREANDA-NEWS. Fitch Ratings has affirmed the ratings of SMHL Series 2008-1 Fund's Class A notes at 'AAAsf,' as shown below. The transaction is a securitisation of first-ranking Australian conforming residential mortgages originated by Members Equity Bank Ltd (ME Bank).

AUD1,981.2m Class A (ISIN AU3FN0007605) notes affirmed at 'AAAsf'; Outlook Stable.

KEY RATING DRIVERS
The affirmation reflects Fitch's view that available credit enhancement is sufficient to support the notes' current ratings, the agency's expectations of Australia's economic conditions, and the fact that the credit quality and performance of the loans in the collateral pool have remained in line with expectations. The transaction remains within its substitution period, with principal collections being used to purchase additional receivables.

The transaction has performed in line with Fitch's expectations, with low levels of defaults and arrears. At 16 February 2015, 30+ days arrears stood at 0.7%, below Fitch's Dinkum Index of 1.15%. There have been four foreclosures since issuance, resulting in a loss of AUD87,276, fully covered by lenders' mortgage insurance (LMI). The underlying portfolio has 61% LMI coverage, provided by Genworth Financial Mortgage Ltd (Insurer Financial Strength Rating: A+/Stable).

SMHL Series 2008-1 Fund's revolving period ends in February 2019. Fitch is comfortable with the long revolving period because portfolio stratifications have not changed significantly since closing, ME Bank's product mix has not materially changed over this time, and the portfolio is performing as expected.

RATING SENSITIVITIES
At the current AAAsf loss severity level of 35%, the transaction could withstand an increase in foreclosures up to 10%. The transaction is sensitive to a one notch downgrade to the LMI provider.