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S&P Global Ratings has raised its ratings for five classes of securities in Liberty Financial’s Liberty Series.
The Liberty Series 2015-1 SME is a securitisation of loans to commercial clients which is secured by mortgages over commercial or residential properties in Australia by Liberty Financial.
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S&P raised the ratings on five classes of small-ticket commercial mortgage-backed, floating-rate, pass-through notes by one tier and affirmed its A1 and A2 class securities at AAA.
The ratings agency cited credit support which is “commensurate with that credit risk” as a supporting factor for the ratings increase.
Further, the agency said: “The transaction passes our stressed cash-flow modelling scenarios at the rating levels, having the ability to make timely interest and ultimate payment of principal."
Additionally, S&P recognised that about 45.7 per cent of the pool is interest-only, with 15.0 per cent of this in bullet loans. Bullet loans are loans where the repayment of the entire loan, sometimes including interest, is required at the end of the term. The Liberty Series’ final bullet loan was due for completion in 2021.
“The underlying pool of assets has weighted-average seasoning of 49 months and a weighted-average current loan-to-value ratio of 61.1 per cent,” S&P continued in its evaluation.
“The asset pool consists of 679 consolidated loans as of July 31, 2017, with pool composition consisting primarily of assets backed by residential property (54.4 per cent) and commercial property (40.4 per cent).”
S&P said that the ratings also reflect the fact that the series’ arrears are “currently tracking within our expectations”. Loans with arrears of more than 90 days equated to 1.5 per cent of the pool as at 31 July 2017.
Last month, Liberty thanked brokers for their support as it celebrated its 20th year of business. The company launched in 1997 and these days provides residential, motor, personal and self-managed super fund (SMSF) loans as well as commercial loans.
Speaking at the time, Liberty’s group sales manager, John Mohnacheff, said: “We’re really proud of how far we’ve come as a business, but we couldn’t have got here without the support of broking partners, who are just as important today as they were when we started. The best part is that we have grown together with a lot of our partners, and that’s what matters most.”
[Related: Aussie sells nMB to Liberty Financial]
