Fitch Ratings affirms HDFC product

Fitch Ratings Lanka (Fitch) has affirmed the 'AA-(lka)' (AA minus (lka)) rating on the Series-A pass-through certificates (PTC) issued by the Home Loan Securitisation Trust 2005 (HLST), with a lower liquidity reserve of Rs 50 million.

The rating addresses the timely payment of interest and the ultimate payment of principal on Series-A. The PTCs are backed by a pool of residential mortgage loans that were originated by Housing Development Finance Corporation Bank of Sri Lanka (HDFC, rated 'A(lka)'/Stable). HLST is a special purpose vehicle created for the sole purpose of this transaction, and is managed by Deutsche Bank A.G. (Colombo Branch), according to a Fitch press release.

“The affirmation is based on the robust performance of the transaction to-date, the availability of credit enhancement to Series-A investors in the form of high overcollateralisation, excess interest spread (EIS, defined as interest collected on the underlying pool less coupon interest paid on Series-A), a liquidity reserve (held at Citibank N.A - Colombo Branch), and the relatively strong credit quality of the underlying collateral,” it said.