Fitch Assigns Expected Rating to Series 2013-1 REDS Trust's Class A2-R Notes

(The following statement was released by the rating agency)SYDNEY, August 03 (Fitch) Fitch Ratings has assigned expected ratings to Series 2013-1 REDS Trust's (REDS 2013-1) class A2-R mortgage-backed floating-rate notes. The transaction is a securitisation of first-ranking Australian residential mortgages originated by Bank of Queensland (A-/Stable/F2).The ratings are as follows:AUD170m Class A2-R notes: 'AAAsf(EXP)'; Outlook Stable.The class A2-R notes are being issued to refinance the soft-bullet class A2 notes on 22 August 2016. The class A2 notes will be repaid from the proposed issuance of the class A2-R notes, as the principal reserve balance was zero at the payment date in July 2016.The class A2 notes were originally issued in August 2013 as part of an AUD850m RMBS issue by Bank of Queensland. The notes' refinance was contemplated in the original issuance. The transaction continues to perform in line with Fitch's expectations at origination and has paid down from AUD850m to approximately AUD423m since issuance.Ratings for the remaining rated notes are unchanged and were affirmed on 22 February 2016 as follows (note balances as at January 2016):AUD244.4m Class A1 (ISIN AU0000RDIHA7) 'AAAsf'; Outlook Stable; andAUD170.0m Class A2 (ISIN AU0000RDIHB5) 'AAAsf'; Outlook Stable.The class A2-R notes will be issued by Perpetual Trustee Company Limited in its capacity as trustee of REDS 2013-1. KEY RATING DRIVERS The 'AAAsf(EXP)' rating assigned to the class A2-R notes is supported by the credit enhancement provided by the subordinate class AB, B1 and B2 notes; the liquidity facility, which is equivalent to 1.9% of the outstanding note balance; and Bank of Queensland's mortgage underwriting and servicing capabilities. EXPECTED RATING SENSITIVITIES The class A-2R notes are independent of lenders' mortgage insurance. Unexpected decreases in residential property value, increases in the frequency of foreclosures and loss severity on defaulted mortgages could produce loss levels higher than Fitch's base-case, which could in turn result in negative rating action on the notes.DUE DILIGENCE USAGENo third party due diligence was provided or reviewed in relation to this rating action.DATA ADEQUACYFitch conducted a file review of 10 sample loan files focusing on the underwriting procedures conducted by Bank of Queensland 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 links given under Related Research below.Contacts: Surveillance AnalystKatie BrookesAnalyst+61 2 8256 0364Fitch Australia Pty LtdLevel 15, 77 King Street, Sydney NSW 2000, AustraliaPrimary Analyst Spencer WilsonAssociate Director+612 8256 0320Secondary AnalystDavid CarrollDirector+61 2 8256 0333Committee ChairpersonNatasha 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.The source of information identified for this rating action was Bank of Queensland.The issuer has informed Fitch that not all relevant underlying information used in the analysis of the rated notes is public.Applicable Criteria APAC Residential Mortgage Criteria (pub. 28 Jul 2016)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884215Counterparty Criteria for Structured Finance and Covered Bonds (pub. 18 Jul 2016)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884963Counterparty Criteria for Structured Finance and Covered Bonds: Derivative Addendum (pub. 18 Jul 2016)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884964Global Criteria for Lenders’ Mortgage Insurance in RMBS (pub. 28 Jul 2016)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=884107Global Structured Finance Rating Criteria (pub. 27 Jun 2016)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=883130Related Research Representations, Warranties and Enforcement Mechanisms in Global Structured Finance Transactions https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=799248Series 2013-1 REDS Trust - Appendixhttps://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715666Additional Disclosures Dodd-Frank Rating Information Disclosure Form https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr _id=1009864Solicitation Status https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1009864Endorsement Policy https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&det ail=31ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S FREE WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Australia Pty Ltd holds an Australian financial services licence (AFS licence no. 337123) which authorises it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001.