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Rating Action:

Moody's upgrades Flexi ABS Trust 2012-1

Global Credit Research - 29 Nov 2013

Sydney, November 29, 2013 -- Moody's Investors Service has today upgraded the ratings of Classes B, C, D and E notes of Flexi ABS Trust 2012-1.

The affected ratings are as follows:

Issuer: Flexi ABS Trust 2012-1

....$A28.05M Class B Notes, Upgraded to Aaa (sf); previously on Sep 10, 2013 Aa2 (sf) Placed Under Review for Possible Upgrade

....$A11.47M Class C Notes Upgraded to Aa2 (sf); previously on Sep 10, 2013 A2 (sf) Placed Under Review for Possible Upgrade

....$A6.38M Class D Notes Upgraded to A2 (sf); previously on Sep 10, 2013 Baa2 (sf) Placed Under Review for Possible Upgrade

....$A5.1M Class E Notes Upgraded to Baa2 (sf); previously on Sep 10, 2013 Ba2 (sf) Placed Under Review for Possible Upgrade

RATINGS RATIONALE

The upgrade was a result of the build-up in credit enhancement during the sequential pay period, relative to the remaining losses expected to materialize in the pool.

The transaction is a cash securitization of retail, point-of-sale receivables, arising from the purchase of, for example, jewelry, fitness equipment, solar equipment, furniture and roofing.

Since closing in August 2012, the pool has paid down very quickly. At end-September 2013, around 70% had been paid down.

A gross default of 1.13% of the original pool balance has materialized. This level compares with Moody's mean default assumption of 2.6% for the life time of the whole pool.

Moody's expects the remaining receivables to perform better than those in the original pool. This is because 70% of the remaining receivables are originated from solar equipment contracts, compared with 51% in the original pool. Obligors of solar equipment contracts are usually home owners. They perform better than obligors of other types of receivables, such as jewelry and fitness equipment.

The notes were paid sequentially until February 2013, and are now paying down on a pro-rata basis. During the sequential pay period, credit enhancement built up substantially.

Class B's credit enhancement increased to 22% at end-September 2013 from 14% in August 2012 when the transaction closed, Class C increased to 15% from 9.5%, Class D increased to 11% from 7%, and Class E increased to 7.9% from 5%.

With the increased credit enhancement and expected performance, Moody's has upgraded Classes B to E.

The primary source of assumption uncertainty is the current macroeconomic environment, which could negatively affect the credit conditions of the receivables.

The principal methodology used in this rating was "Moody's Approach to Rating Australian Asset-Backed Securities" published in July 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

The cash flow model used to analyze the transaction was ABSROM. The cash flow model evaluates all default scenarios that are then weighted considering the probabilities of the lognormal distribution assumed for the portfolio default rate. In each default scenario, the corresponding loss for each class of notes is calculated given the incoming cash flows from the assets and the outgoing payments to third parties and noteholders. Therefore, the expected loss or EL for each tranche is the sum product of (i) the probability of occurrence of each default scenario; and (ii) the loss derived from the cash flow model in each default scenario for each tranche. As such, Moody's analysis encompasses the assessment of stress scenarios.

REGULATORY DISCLOSURES

Moody's did not receive or take into account a third-party assessment on the due diligence performed regarding the underlying assets or financial instruments related to the monitoring of this transaction in the past six months.

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Noirit Zaman
Associate Analyst
Structured Finance Group
Moody's Investors Service Pty. Ltd.
Level 10
1 O'Connell Street
Sydney NSW 2000
Australia
JOURNALISTS: (612) 9270-8102
SUBSCRIBERS: (612) 9270-8100

Marie Wai Man Lam
VP - Senior Credit Officer
Structured Finance Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Releasing Office:
Moody's Investors Service Pty. Ltd.
Level 10
1 O'Connell Street
Sydney NSW 2000
Australia
JOURNALISTS: (612) 9270-8102
SUBSCRIBERS: (612) 9270-8100

Moody's upgrades Flexi ABS Trust 2012-1
No Related Data.

 

© 2014 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

 


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