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MTF Warehouse Trust No.1 Notes Rating Affirmed

MELBOURNE (S&P Global Ratings) Nov. 28, 2022--S&P Global Ratings today affirmed its 'AAA (sf)' rating on the warehouse notes issued by Trustees Executors Ltd. as trustee of MTF Warehouse Trust No.1. The notes are backed by consumer credit and finance lease contracts originated by New Zealand-based Motor Trade Finance Ltd.

The rating affirmation follows the increase in the maximum balance of the warehouse notes to NZ$675 million from NZ$370 million.

S&P Global Ratings' rating on the warehouse notes reflects:

  • The credit risk of the underlying collateral portfolio and the credit support provided for the warehouse notes in the form of subordination, which is commensurate with that credit risk.
  • That documented eligibility criteria, portfolio parameters, and amortization triggers govern the composition of the collateral pool.
  • That the portfolio parameters require at least 70% of the portfolio to comprise receivables backed by passenger and light commercial vehicles, for which we have given credit to recoveries.
  • That all contract payments, including the residual or balloon payments, are an obligation of the borrower. As a result, the trust is not exposed to any market-value risk associated with the sale of the motor vehicles (on performing receivables), which is a risk that could be associated with other products, such as operating leases.
  • The issuer's capacity to pay interest to the warehouse note holders in full on each interest payment date, and to repay principal in full no later than the final maturity date, under rating stresses commensurate with a 'AAA (sf)' rating. Timely payment of senior expenses and warehouse note interest is supported by the use of principal collections and an amortizing liquidity reserve funded via note issuance, which is equal to 0.5% of the aggregate note balance and subject to a floor of NZ$300,000.
  • The legal structure of the issuer, which is established as a special-purpose entity and meets our criteria for insolvency remoteness.
  • The counterparty support provided by Bank of New Zealand as bank account provider and Commonwealth Bank of Australia and Westpac Banking Corp. as interest-rate swap providers. Fixed- to floating-rate interest-rate swaps are provided to hedge the mismatch between the fixed-rate payments on the receivables and the floating-rate interest payable on the notes. The transaction documents for the swap and bank accounts include downgrade language consistent with our "Counterparty Risk Framework: Methodology And Assumptions" criteria, published on March 8, 2019, which requires the replacement of the counterparty or other remedy, should its rating fall below the applicable rating.

Related Criteria

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REGULATORY DISCLOSURES

Please refer to the initial rating report for any additional regulatory disclosures that may apply to a transaction.

AUSTRALIA

S&P Global Ratings Australia Pty Ltd holds Australian financial services license number 337565 under the Corporations Act 2001. S&P Global Ratings' credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act).

Primary Credit Analyst:Leslie J Wong, Melbourne + (61) 3-9631-2932;
leslie.wong@spglobal.com
Secondary Contact:Elizabeth A Steenson, Melbourne + 61 3 9631 2162;
elizabeth.steenson@spglobal.com

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