Fitch Ratings is monitoring the potential consequences that the earthquake that hit Christchurch in February might have on outstanding Fitch-rated New Zealand mortgage-backed transactions.

Fitch has already started monitoring the performance of these deals following the earthquake that hit Christchurch in September last year.

The rating agency said it has been in contact with servicers to quantify the number of affected properties, eventual losses, and the risk of temporary volatility in available income.

The September 2010 earthquake has had limited impact so far, as the number of seriously damaged properties was overall very small, with available income among the affected structured finance transactions not showing strong signs of volatility thanks to the high overall trust income levels and the tansaction's structural features.

Fitch said it is also too early to quantify the impact of this most recent earthquake, which took place on the Feb. 22.

The rating firm will continue to monitor the impact of both earthquakes in terms of servicing activity, arrears levels, recovery rates, and eventual principal or interest shortfalls on the affected transactions, which are listed at the end of this commentary, together with the exposure to the relevant areas.

The full list of Fitch-rated transactions potentially impacted by the earthquake, together with regional exposures include: BNZ RMBS Trust Series 2008-1;Kingfisher NZ Trust 2008-1;Kiwibank RMBS Trust Series 2009-1;Medallion NZ Trust Series 2009-1R; Property finance Securities LS 2005-4 Trust; Propertyfinance Securities RM 2005-1 Trust; Sapphire II NZ Series 2005-1 Trust; Sapphire III NZ Series 2006-1 Trust; Sapphire IV NZ Series 2007-1 Trust; and Westpac NZ Securitization Limited.

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