Mortgage Rate Cuts Have No Rating Impact for Chinese RMBS, S&P Says

MT Newswires Live10-17

A reduction in mortgage rates will not factor into the ratings of China's residential mortgage-backed securities (RMBS), S&P Global Ratings said in a Wednesday release.

Bank of China (HKG:3988, SHA:601988) and China Merchants Bank (HKG:3968, SHA:600036), which originate two S&P-rated RMBS, said they will adjust their rates in line with the central bank's recently announced measure.

The adjustments, which will be effective Oct. 25, will apply to the pools backing the two rated RMBS, S&P said.

The rated transactions are Zhaoyin HeJia 2020-5 Residential Mortgage Backed Securitization Trust and Zhong Ying Wan Jia 2021-5 RMBS.

The rating agency expects a minimal decline in the RMBS' weighted-average pool yields due to the rate decline, with credit enhancement to shield the likely effect on cash flow.

Price (HKD): $3.77, Change: $-0.040, Percent Change: -1.05%

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