OREANDA-NEWS. Fitch Ratings has affirmed the ratings of three Illawarra Series RMBS transactions. The transactions are securitisations of first-ranking Australian residential mortgages originated by IMB Limited (IMB). The rating actions are listed at the end of this commentary.

KEY RATING DRIVERS
The affirmations reflect Fitch's view that available credit enhancement is sufficient to support the notes' current ratings, and can withstand deterioration of economic conditions in Australia in line with the agency's expectations. The credit quality and performance of the loans in the collateral pools have remained in line with Fitch's expectations, and all transactions benefit from lenders' mortgage insurance (LMI) and excess spread levels.

As per the APAC Residential Mortgage criteria, the default model was not run for this rating action, as a review of pre-determined performance triggers indicates that the transactions display stable asset performance.

As at end-December 2015, 30+ days arrears levels for all three Illawarra RMBS transactions were below Fitch's 30+days Dinkum Index of 0.91%. Illawarra Series 2006-1 RMBS Trust had the highest level of arrears at 0.45%, while Illawarra Series 2010-1 RMBS Trust recorded no loans in 30+ days arrears.

LMI is provided by QBE Lenders' Mortgage Insurance Limited (Insurer Financial Strength Rating: AA-/Stable), Genworth Financial Mortgage Insurance Pty Ltd (Insurer Financial Strength Rating: A+/Stable), and Housing Loan Insurance Corporation. The transactions have experienced low levels of losses, with all losses being covered by LMI or excess spread.

RATING SENSITIVITIES
Sequential pay-down has increased credit enhancement for the senior notes of all the transactions, with the 'AAAsf' rated notes able to withstand multiples of the latest reported arrears. The ratings are not expected to be affected due to any foreseeable change in performance.

The Class A and AB notes are independent of downgrades to the LMI providers' ratings.

Negative rating actions would be considered if there was an unexpected increase in losses above expected levels that reduced excess spread and resulted in charge-offs.

DUE DILIGENCE USAGE
No third party due diligence was provided or reviewed in relation to this rating action.

DATA ADEQUACY
Fitch conducted a file review of 10 sample lease files focusing on the underwriting procedures conducted by IMB Limited compared to its credit policy at the time of underwriting. Fitch has checked the consistency and plausibility of the information and no material discrepancies were noted that would impact Fitch's rating analysis.

A comparison of the transaction's representations, warranties and enforcement mechanisms (RW&Es) to those of typical RW&Es for this asset class is available by accessing the reports and/or links given under Related Research below.

Illawarra Series 2006-1 RMBS Trust:
AUD45.8m Class A (ISIN AU3FN0000139) notes affirmed at 'AAAsf'; Outlook Stable; and
AUD12.5m Class B (ISIN AU3FN0000147) notes affirmed at 'BBsf'; Outlook Stable.

Illawarra Series 2010-1 RMBS Trust:
AUD63.3m Class A (ISIN AU3FN0010468) notes affirmed at 'AAAsf'; Outlook Stable; and
AUD4.0m Class AB (ISIN AU3FN0010476) notes affirmed at 'AAAsf'; Outlook Stable.

Illawarra Series 2013-1 RMBS Trust:
AUD115.1m Class A (ISIN AU3FN0018784) notes affirmed at 'AAAsf'; Outlook Stable.