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SMHL Series Securitisation Fund 2018-2 Prime RMBS Assigned Preliminary Ratings

          MELBOURNE (S&P Global Ratings) July 23, 2018--S&P Global Ratings today assigned its preliminary ratings to five classes of prime residential mortgage-backed securities (RMBS) to be issued by Perpetual Ltd. as trustee for SMHL Series Securitisation Fund 2018-2 (see list). SMHL Series Securitisation Fund 2018-2 is a securitization of prime residential mortgages originated by Members Equity Bank Ltd.
          The preliminary ratings reflect:
          - Our view of the credit risk of the underlying collateral portfolio, including our view that the credit support is sufficient to withstand the stresses we apply. The credit support for the rated bonds comprises bond subordination, excess spread and lenders' mortgage insurance (LMI) on 35.6% of the portfolio.
          - Our expectation that the various mechanisms to support liquidity within the transaction, including a liquidity facility equal to 1.0% of the outstanding mortgage balance, the principal draw function, and a spread reserve that builds from available excess spread, after the call-option date, are sufficient to ensure timely payment of interest.
          - The extraordinary expense reserve of A$150,000 is provided via a cash drawing under the payment funding facility on the closing date to meet extraordinary expenses. The reserve is to be topped up from excess spread, if any, to the extent it has been drawn and has not been reimbursed from an additional payment funding facility draw.
          - The fixed-to-floating interest-rate swaps provided by [ ] to hedge the mismatch between the fixed-rate receipts on the fixed-rate loans and the floating-rate interest payable on the bonds. A fixed-rate end date on Aug. [ ], 2023, in the transaction structure means all fixed-rate loans in the trust must convert to floating rate by the fixed-rate end date.
          A copy of S&P Global Ratings' complete report for SMHL Series Securitisation Fund 2018-2 can be found on RatingsDirect, S&P Global Ratings' Web-based credit analysis system, at http://www.capitaliq.com.