The Wall Street Journal-20080205-Australian Debt For Mortgages Is Under Review

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Australian Debt For Mortgages Is Under Review

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SYDNEY, Australia -- Moody's Investors Service Inc. placed 83 billion Australian dollars (US$75 billion) of Australian residential- mortgage-backed securities on review for possible downgrades yesterday following a similar move on PMI Mortgage Insurance Ltd. of the U.S.

The ratings actions affect 325 portions, or tranches, of 144 Australian RMBS transactions insured by PMI, representing about 47% of the A$173.4 billion in notes outstanding in Australia's RMBS market.

However, while this applies to almost half the market, the vast majority of triple-A-rated notes aren't likely to be downgraded in the event the credit-ratings firm does cut PMI's ratings.

Moody's said despite the ratings review, "a number" of transactions could have their ratings affirmed at the end of the process depending on the proportion of loans insured by PMI, their seasoning and other structural features.

Standard & Poor's Ratings Group last week affirmed all of its ratings on Australian RMBS issuance, saying the exposure to U.S. subprime problems remained negligible.