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Lenders' Mortgage Insurance Is Only One Of Several Strengths Supporting Australian RMBS Deals May 09
Standard & Poors, May 2009
Abstract
Recent market commentary, following National Australia Bank Ltd.'s announcement of its half-year results earlier this week, has raised concern over the potential reduced support from lenders' mortgage insurance (LMI) policies for Australian mortgage loans. In particular, the bank mentioned its expectation that certain lenders' mortgage insurance (LMI) claims for loans entered mainly between 2004 and 2006 may not be fully met by LMI providers. Partly due to this expectation, the bank increased its collective provision to A$142 million as 'part of a management overlay to cover these loans'. Australian prime residential mortgage-backed securities (RMBS) investors may react to this news with concern, particularly those that hold the subordinated tranches, because the link in the credit performance of these securities is...
Companies mentioned in this report are: Australia (Commonwealth of) (Unsolicited Ratings)
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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