Fitch Affirms 10 Tranches Across Two Flexi ABS Transactions; Outlook Stable

(The following statement was released by the rating agency)SYDNEY, May 09 (Fitch) Fitch Ratings has affirmed 10 tranches across Flexi ABS Trust 2014-1 (Flexi 2014-1) and Flexi ABS Trust 2015-2 (Flexi 2015-2). The Outlook on three tranches of Flexi 2014-1 has been revised to Stable from Positive. The transactions are securitisations backed by small balance consumer loan receivables. The notes were issued by Perpetual Corporate Trust Limited in its capacity as trustee. A full list of rating actions follows at the end of this ratings action commentary.KEY RATING DRIVERSThe affirmations reflect Fitch's view that initial sequential amortisation has resulted in a build-up of credit enhancement for the rated notes and the transactions' strong performance compared with Fitch's expectations. Total net losses have been well below Fitch's base cases to date and excess spread has been more than sufficient to cover any losses incurred. The revision of the Outlook to Stable from Positive on the class C, D and E notes of Flexi 2014-1 reflects the adjustment of base cases that were applied at the last review. The adjustments to the base cases reflect higher historic losses in more recent cohorts in the wider Flexi pool. The higher losses have not materialised in either transaction. RATING SENSITIVITIES Both transactions are currently amortising pro-rata, limiting additional build-up of subordination. Switch back to sequential payment is only expected if a charge-off occurs or the 60+ day arrears average over six months is greater than 4% of the pool. The prospect of downgrade is considered remote at present, given the performance of the pool to date, the strong excess spread and subordination.The revision of the Outlook to Stable from Positive in the class C, class D and class E notes of Flexi 2014-1 reflects that future upgrades are unlikely due to the higher base cases and higher concentration as the pool shrinks. Both transactions can withstand additional losses; cumulative losses could increase by up to 1.5 times to be in line with Fitch's expected losses at the 'Bsf' scenario. 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 FlexiGroup 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.The full list of rating actions is shown below:Flexi ABS Trust 2014-1AUD24.2m Class A2 notes (ISIN AU3FN0023800): affirmed at 'AAAsf'; Outlook Stable;AUD5.1m Class B notes (ISIN AU3FN0023818): affirmed at 'AAsf'; Outlook Stable;AUD2.3m Class C notes (ISIN AU3FN0023826): affirmed at 'Asf'; Outlook revised to Stable from Positive;AUD1.7m Class D notes (ISIN AU3FN0023834): affirmed at 'BBBsf'; Outlook revised to Stable from Positive;AUD0.9m Class E notes (ISIN AU3FN0023842): affirmed at 'BBsf'; Outlook revised to Stable from Positive.Flexi ABS Trust 2015-2AUD83.5m Class A2 notes (ISIN AU3FN0027868): affirmed at 'AAAsf'; Outlook Stable;AUD12.1m Class B notes (ISIN AU3FN0027876): affirmed at 'AAsf'; Outlook Stable;AUD9.1m Class C notes (ISIN AU3FN0027892): affirmed at 'Asf'; Outlook Stable;AUD7.1m Class D notes (ISIN AU3FN0027900): affirmed at 'BBBsf'; Outlook Stable;AUD4.0m Class E notes (ISIN AU3FN0027918): affirmed at 'BBsf'; Outlook Stable.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.Contacts: Lead Surveillance AnalystKatie BrookesAnalyst+612 82560 364Fitch Australia Pty Ltd. Level 15, 77 King St, Sydney, NSW 2000, AustraliaCommittee Chairperson Natasha VojvodicSenior Director+612 8256 0350Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com.Additional information is available at www.fitchratings.com.Sources of Information:The source of information used to assess these ratings were FlexiGroup, The issuer has informed Fitch that not all relevant underlying information used in the analysis of the rated notes is public.Applicable Criteria Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum (pub. 14 May 2014)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744175Global Consumer ABS Rating Criteria (pub. 03 Dec 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874105Global Structured Finance Rating Criteria (pub. 06 Jul 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867952Related Research Flexi ABS Trust 2014-1 https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750948Flexi ABS Trust 2014-1 - Appendixhttps://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750949Flexi ABS Trust 2015-2 https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867510Flexi ABS Trust 2015-2 - Appendixhttps://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=867588Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878450Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions (Applicable to Transactions Rated from Sept.26, 2011 until June 15, 2015) https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863817Additional Disclosures Dodd-Frank Rating Information Disclosure Form https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr _id=1004168Solicitation Status https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1004168Endorsement Policy https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&det ail=31ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. 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