TEXT-S&P Report Says West Australia Recorded Highest Arrears In Q2

(The following was released by the rating agency)

MELBOURNE (Standard & Poor's) Oct. 10, 2012--WesternAustralia recorded the nation's highest level of arrears in thesecond quarter (Q2), ended June 30, 2012, according to a reportby Standard & Poor's Ratings Services. The report, "AustralianRMBS Performance Watch," says that loans that are greater than30 days in arrears totaled 1.87% in Western Australia in Q2,followed by Queensland, at 1.82%, and New South Wales, at 1.77%.

The report includes the key findings that:

-- Half of the 10 worst-performing postcodes in Q2 were incoastal areas, with a majority in New South Wales;

-- Investment loans exhibited marginally better arrearsperformance in the quarter; and

-- The percentage of low-documentation (low-doc) loans inarrears was highest in Tasmania and Western Australia in Q2,while Victoria and the Northern Territory were the bestperformers.

Loans underlying Australian prime residentialmortgage-backed securities (RMBS) that are greater than 30 daysin arrears decreased overall in Q2, with the prime Standard &Poor's Mortgage Performance Index (SPIN) at 1.50%, compared with1.61% in the previous quarter. The SPIN decreased by 19 basispoints during the first half due to the effect of lower interestrates. Total prime RMBS outstanding totaled approximatelyA$114.5 billion in Q2, down 1% from Q1.

The June edition of "Australian RMBS Performance Watch"includes new features such as a breakdown by state of low-docloans underlying Australian RMBS, the arrears performance overtime of investment loans compared with owner-occupied loans, thearrears performance of loans in metropolitan versusnonmetropolitan areas, and a list of the 10 worst-performingpostcodes.

We have added these to provide the market with greatertransparency and show the trends of different performanceattributes over time across the entire prime RMBS portfolio.

Standard & Poor's Mortgage Performance Index (SPIN) measuresthe weighted-average arrears more than 30 days past due onresidential mortgage loans in both publicly and privately ratedAustralian RMBS transactions. The SPIN is calculated for primeand subprime residential mortgage loans. The indices identifythe proportion of loans in arrears in each of the 31-60 days,61-90 days, and 90+ days' arrears categories. SPIN is calculatedon a monthly basis using information provided to Standard &Poor's by the issuers of RMBS transactions.

The report, "Australian RMBS Performance Watch," for thequarter ended June 30, 2012, provides a comprehensive analysisof arrears statistics on loans underlying Australian RMBS. Thereport can be found on RatingsDirect, at "", under the Global Research Publications window. SelectStructured Finance Research from the drop-down menu in thiswindow. Members of the media can contact Richard Noonan for acopy on (61) 3 9631 2152 or richard_noonan@standardandpoors.com.