NEWS


HERITAGE BANK RETAIL BONDS’ 'BBB+' RATING REVIEWED AND AFFIRMED


Melbourne, Tuesday, 22 November 2016 – Australia Ratings has reviewed and affirmed its credit rating of ‘BBB+’ of the Heritage Bank Retail Bonds (the Bonds). This rating is the highest long-term rating in the intermediate category of creditworthiness on the rating scale of Australia Ratings. The Bonds are senior and unsecured debt obligations of Heritage Bank Limited. 

Australia Ratings also confirmed its product complexity indicator of ‘GREEN’ on the Bonds, indicating the Bonds to be a debt investment with simple and straight forward terms and conditions. A coupon of 7.25% p.a. is payable quarterly in arrears until maturity of the Bonds in June 2017.

Australia Ratings’ credit analyst, Chris Dalton said “the ‘BBB+’ rating of the Bonds reflects the credit quality of Heritage Bank”. Mr Dalton added “earnings and profitability increased in financial year 2016 in line with expectations and reflects ongoing competition in the residential loan market. Heritage’s performance in keeping down arrears remains exemplary with only 0.30% of loans in arrears as at 30 June 2016. Heritage continues to execute a consistent business strategy. Based on the current economic outlook and the business and financial risk profile of Heritage, the rating is expected to remain unchanged before the bonds’ maturity date in 2017”.

The credit rating reflects the following key strengths of Heritage Bank’s business:

  • a high quality, low risk portfolio of residential mortgages with below industry average arrears and losses;
  • a conservative risk appetite with regard to maintaining capital and liquidity above regulatory capital requirements; and
  • a diversified funding base with experience and capability in raising funds via both wholesale and retail markets.

The credit rating also reflects the following key risks to Heritage Bank’s business:

  • a slowing of demand and increased competition in the residential mortgage market which may constrain earnings growth; and
  • a reliance upon retained earnings to build capital base for future asset growth; and geographic concentration of the mortgage loan portfolio in Queensland.

A GREEN Product Complexity Indicator designation indicates the Bonds’ terms and conditions are simple and straightforward with a very low level of complexity on Australia Ratings’ five point Product Complexity Indicator scale.Re

A full rating report is available from www.australiaratings.com.

For more information contact:
Chris Dalton, Managing Director
Email: chris.dalton@australiaratings.com
Tel:  03 8080 6684

SMARTER MONEY FUND 'A' RATING AFFIRMED


Melbourne, 4 November 2016 – Australia Ratings has affirmed its credit rating of ‘A’ to the units issued by the Smarter Money Fund, formerly the Smarter Money Active Cash Fund, (the Fund). The ‘A’ credit rating represents a high degree of creditworthiness on the rating scale used by Australia Ratings to assess the credit profile of a managed fund. The rating primarily reflects the credit quality of the Fund’s investments as well as the experience and skill of the investment manager, Smarter Money Investments.

Australia Ratings analyst Renee Corcoran said “the Smarter Money Fund has continued to pursue its investment objective through actively managing a liquid portfolio of fixed income securities that have a high degree of credit quality.” Ms. Corcoran also noted “investors in the Fund have a low exposure to volatility arising from changes in interest rates and the credit risk of the portfolio is restricted to investment grade securities.”

Smarter Money Fund (formerly the Smarter Money Active Cash Fund) was launched in February 2012 and aims to generate a return of 1.0% to 2.0% above the cash rate by investing in Australian dollar fixed income securities that carry minimal interest rate risk such as cash and floating-rate securities. During the past year to 30 September 2016, the Fund’s return was 3.8% after all fund fees to investors.

While the rating primarily reflects the credit quality of the assets of the Fund, Australia Ratings noted the stability of the investment team and the demonstrated track record of exceeding the investment objective of the Fund.

The units provide investors with a periodic distribution of income and a return of principal via a redemption request. Australia Ratings has also affirmed its Product Complexity Indicator of ‘BLUE” to the Fund’s units to indicate that an investment in the units represents a relatively straightforward type of fixed interest investment.

A full rating report is available from www.australiaratings.com.

For more information contact:
Chris Dalton, Managing Director
chris.dalton@australiaratings.com
03 8080 6684

Renee Corcoran, Director
renee.corcoran@australiaratings.com
03 8080 6684

SMARTER MONEY HIGHER INCOME FUND 'A-' RATING AFFIRMED


Melbourne, 4 November 2016 – Australia Ratings has affirmed its credit rating of ‘A-’ to the units issued by the Smarter Money Higher Income Fund. The ‘A-’ credit rating represents a high degree of creditworthiness on the rating scale used by Australia Ratings to assess a managed fund’s credit profile. The rating primarily reflects the credit quality of the Fund’s investments and the experience and skill of the investment manager, Smarter Money Investments.

Australia Ratings analyst Renee Corcoran said, “Investors in the Fund have low exposure to volatility arising from interest rates changes through a portfolio of fixed income securities with a high degree of credit quality.” Ms. Corcoran added, “The Fund’s credit risk exposure is actively managed with the majority of its assets in investment grade securities such as Australian denominated cash or cash equivalents and Australian denominated floating rate bonds, including RMBS, ABS and hybrid securities.”

The Smarter Money Higher Fund was launched in September 2014 and aims to generate a return of 1.5% to 3.0% p.a. above the RBA official cash rate. The Fund invests in Australian dollar fixed income securities that carry minimal interest rate risk such as cash and floating-rate securities. During the past year to 30 September 2016, the Fund’s return was 4.1% after all fund fees to investors.

While the rating primarily reflects the credit quality of the assets of the Fund, Australia Ratings noted the stability of the investment team and the demonstrated track record of exceeding the investment objective of the Fund.

The units provide investors with a periodic distribution of income and a return of principal via a redemption request. Australia Ratings has also affirmed its Product Complexity Indicator of ‘BLUE” to the Fund’s units to indicate that an investment in the units represents a relatively straightforward type of fixed interest investment.

A full rating report is available from www.australiaratings.com.

For more information contact:
Chris Dalton, Managing Director
chris.dalton@australiaratings.com
03 8080 6684

Renee Corcoran, Director
renee.corcoran@australiaratings.com
03 8080 6684


 

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