OREANDA-NEWS. March 01, 2016. Fitch Ratings has affirmed the ratings for ConQuest 2010-1R Class A notes. The transaction is a securitisation of Australian conforming residential mortgages originated by MyState Bank Limited. The rating action is as follows:

AUD 333.5m Class A notes affirmed at 'AAAsf'; Outlook Stable;

KEY RATING DRIVERS
The affirmations reflect Fitch's view that the available credit enhancement is sufficient to support the notes' current ratings, and the agency's expectations of Australia's economic conditions. The credit quality and performance of the loans in the collateral pools have also remained in line with expectations.

As of January 2016, 30+ days arrears were 1.03% compared to Fitch's 3Q15 Dinkum RMBS Prime Index of 0.91%. Lender's mortgage insurance (LMI) covered 41.1% of the pool; 20.6% Genworth Financial Mortgage Insurance Pty Limited (Insurer Financial Strength Rating A+/Stable) and 20.5% QBE Lenders Mortgage Insurance Ltd (Insurer Financial Strength Rating AA-/Stable).

The transaction remains within its 10-year revolving period, extended to August 2024 in August 2014, and no amortisation of the notes has occurred to date. Fitch is comfortable with the long revolving period as the portfolio stratifications have not changed significantly since initial issue, MyState's product mix has not materially changed over this time, and the portfolio is performing as expected.

RATING SENSITIVITIES
The Class A notes are not independent of downgrades to the LMI provider's ratings but can withstand a one notch downgrade to the LMI providers.

At Fitch's 'AAAsf' breakeven default rate of 19.8%, the Class A notes can withstand an additional 2.93% defaults at Fitch's 'AAAsf' loss severity.

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 loan files focusing on the underwriting procedures conducted by MyState Bank Limited compared to MyState Bank Limited's 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.