OREANDA-NEWS. Fitch Ratings has assigned final ratings to Triton Trust No.7 CS Warehouse No 1's residential mortgage-backed floating-rate notes. The issuance consists of notes backed by Australian residential mortgages originated by Calibre Financial Services (Calibre) and eChoice Limited (eChoice). The ratings are as follows:

AUD 108.34m Class A notes: 'AAAsf'; Outlook Stable;
AUD 6.0m Class B notes: 'Asf'; Outlook Stable;
AUD 1.5m Class D notes: 'BBsf'; Outlook Stable; and
AUD 1.0m Class E notes: 'NRsf'.

The notes are issued by Perpetual Corporate Trust Limited in its capacity as trustee of Triton Trust No.7 CS Warehouse Series No 1.

At the cut-off date, the pool had 100% lenders' mortgage insurance (LMI) cover. The weighted-average (WA) seasoning of the portfolio is 92.1 months, with a WA current unindexed loan/value ratio (CLVR) of 72.2% and an indexed WACLVR of 63.5%. Loans with an unindexed LVR greater than 80% account for 35.5% of the pool. The average current loan size is AUD146,459; investment loans represent 56.0% of the pool by balance, and interest-only loans represent 65.5%.

KEY RATING DRIVERS
Closed Portfolio: The transaction documents do not allow for the addition of new receivables to the trust. The portfolio is considered static with a pass through pay down structure for the purpose of Fitch's analysis.

Minimum Subordination Amounts: The transaction requires that a minimum dollar amount of subordination must be met for each rated note at each payment date before principal can be distributed. This feature is particularly important during the pro-rata period and after pool transfers to ensure that there is sufficient subordination in the tail end to cover for losses of large loans.

Adequate Liquidity Support: Liquidity support will be provided via excess spread, a yield reserve, principal draws and a liquidity reserve sized at 1.6% of the mortgage balance which will amortise to a reserve floor of AUD200,000.

Servicer Transition: The role of servicer has fully transitioned from eChoice to Columbus Capital Pty Limited (Columbus) in 2015. Columbus also acquired the eChoice's servicing platform, allowing a relatively seamless transition of servicing and late payment collections.

RATING SENSITIVITIES
The transaction structure supports an LMI dependent rating for the Class A, B and D notes; therefore LMI is a key driver supporting the 'AAAsf' rating.

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 result in negative rating actions on the notes.

Fitch evaluated the sensitivity of the ratings assigned to Triton Trust No.7 CS Warehouse Series No 1 to increased defaults and decreased recovery rates over the life of the transaction.

Its analysis found that the Class A notes' ratings under Fitch's moderate (15% increase) and severe (30% increase) default scenarios saw a two-notch downgrade to 'AAsf'. Collectively, the Class A, B and D notes' ratings were impacted under both the moderate (15% decrease) and severe (30% decrease) recovery rate scenarios. Under the moderate recovery scenario, the Class A, B and D notes experienced a two, six and five notch downgrade, respectively.

The transaction shows greater sensitivity to a combination of both increased defaults and decreased recoveries with the Class A, B and D notes' ratings experiencing a two, nine and five notch downgrade, respectively under the medium multiple stress. The Class A, B and D notes' ratings experienced an eight, eleven and five notch downgrade, respectively, under the severe stress.

Fitch found that the Class A, B and D notes' ratings were stable in scenarios where the LMI providers are collectively downgraded by two notches or less. In more severe scenarios, such as a four-notch downgrade of the LMI providers, the Class A and B notes are impacted, with their ratings experiencing downgrades of one category.

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 Calibre and eChoice compared to their 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.