Moody’s says Australian RMBS ratings safe from downgrades for now

Sydney, July 23, 2009 -- Moody's Investors Service says that rating 
downgrades for Australian prime and non-conforming RMBS are unlikely for 
now as collateral in both Prime and Non Conforming sectors are performing 
within expectations.

"Moreover, despite a long term trend of increased delinquencies, their 
ratings are anticipated to remain stable in the absence of mortgage
insurer downgrades, while some upgrades should occur as subordination
levels increase due to the typically sequential pay structures employed
in Australia," says Arthur Karabatsos, a Moody's Vice President and 
Senior Analyst.

"The Australian RMBS market is dominated by prime loans that represent
98% of the current outstanding as of March 2009 and loans originated by 
investment grade banks. Loans to credit impaired borrowers account for 
only 0.6% of the RMBS market." says Karabatsos, who was speaking on the 
release of Moody's annual review -- which he authored -- on Australian 
RMBS.

In looking at the risks now apparent in the RMBS sector, the Moody's
outlook says the risk of servicer disruption -- due to the failure or 
collapse of a servicer -- is more likely to occur with a non-bank lender. 
Since the credit crisis, non-bank lenders have been facing difficulties 
accessing new funds via the term market which in itself brings into 
question the long term sustainability of some of these entities given 
high dependency on RMBS.

In addition, non-bank-originated portfolios are displaying higher arrears 
due to the fact that the non-banks originated loans with riskier 
characteristics, such as, high loan amounts, higher loan-to-value ratios, 
and investment and low-doc loans.

The new Moody's report also discusses the changes to Moody's RMBS rating 
methodology over the last 12 months, the influence of ratings for lenders 
mortgage insurers, rating transitions, and the outlook for the economy 
and housing prices.

The report is entitled, Annual Sector Review -- Australian RMBS 2009. It 
can be found at www.moodys.com

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