Bangkok--8 Mar--Moody's Investors
Moody's Investors Service says that the performance of mortgage loans in outstanding RMBS originated in Korea, Hong Kong, and Taiwan was steady in 4Q2010, with no downward pressure evident on ratings in any of the three markets.
For Korea, the gross default ratio was less than 0.3% of the outstanding pool balance for all transactions, as of end-December 2010.
For Hong Kong, the ratio of 30-119 days past due -- as a percentage of the outstanding pool balance -- was a negligible less than 0.1%.
In Taiwan, the gross default ratio for high loan-to-value loans deteriorated slightly from the prior quarter, but was still lower than the peak seen in late 2009.
Moody's analysis appears in its just-published 4Q2010 report, "Asia ex-Japan RMBS 4Q2010 Performance Review."
"The LTV of Taiwan's Hsinchu 2 mortgages was higher than Hsinchu 1's -- hence, Hsinchu 2 has a higher default ratio. But, despite a slight increase in the fourth quarter to 5.2% as of December 2010, the gross default ratio improved overall in 2010, from a peak of over 7% at end-December 2009. Hsinchu 1's ratio has been a stable 2%," says Kan Leung, a Moody's Analyst and author of the report.
"The subordination in these two transactions is abundant, as a result of their sequential payment structures, and provides sufficient protection against current performance. We see no rating implications for either of these two RMBS transactions," adds Leung.
"Transaction volume was up and price was stabilizing in the Korean property market in the fourth quarter of 2010, after a year of stagnancy.
Although we do not foresee a sustained rebound for either indicator, Moody's is maintaining its stable outlook on the performance of Korea's mortgage loan receivables. Given the low delinquency rate for mortgage loans, we consider current subordination sufficient for the ratings on the relevant notes," says Leung.
"Indeed, the accumulated credit enhancement is one of the reasons that several tranches of Korea First Mortgage No. 6 and No. 7 were upgraded in February 2011," adds Leung.
"Asia ex-Japan RMBS 4Q2010 Performance Review," which is part of Moody's efforts to provide more information and transparency to the market, is available at www.moodys.com.