Local creditwatcher Philippine Rating Services Corp. has maintained “high quality” and “adequate” ratings on National Home Mortgage Finance Corp. (NHMFC)’s “Bahay Bonds” securitization issue, noting manageable default rates on underlying loan accounts despite some decline in asset quality.
In a statement, Philratings said it had maintained its ratings of “PRS Aa” and “PRS Baa” for NHMFC’s P1.065 billion in class-A senior notes and the P310.898 million in class-B subordinated notes, respectively.
Based on Philratings’ metrics, obligations rated “PRS Aa” are deemed of “high quality” and subject to “very low” credit risk. The obligor’s capacity to meet its financial commitment on the obligation is deemed as “very strong.”
On the other hand, debt rated “PRS Baa” are deemed to exhibit “adequate protection parameters.” Adverse economic conditions and changing circumstances, however, are seen more likely to lead to a weakened capacity to meet financial commitment.
PRS Baa-rated issues may possess certain speculative characteristics, Philratings said, noting that class-B subordinated notes provide a degree of protection for the class-A notes as the class-B notes will absorb initial losses that may be brought by mortgage accounts included in the asset pool that may go into default. Doris C. Dumlao