CariCRIS reaffirms HMB's $100m debt obligation

CARIBBEAN Information and Credit Rating Services Ltd (CariCRIS) has reaffirmed its overall issue ratings of ttAA- (SO) on the Trinidad and Tobago national scale to the $100 million collateralised mortgage obligation (CMO) of Home Mortgage Bank (HMB) (CMO 2022-01).

In a release, CariCRIS said this rating indicates a high level of creditworthiness of this structured debt obligation, adjudged in relation to other rated debt obligations within Trinidad and Tobago.

It also assigned a stable outlook on the ratings.

CariCRIS said the stable outlook is based on an expectation of continued improvement in economic conditions in Trinidad and Tobago, which should have a positive impact on businesses and households.

This may also lead to an improvement in asset quality and stability of the overall credit risk of CMO 2022-01.

"The ratings of CMO 2022-01 continue to reflect the good credit quality of the securitised loans in the mortgage pool, notwithstanding a marginal deterioration between 2022 and 2023. Notably, the simple transaction structure with built-in credit enhancements continues to provide adequate protection to investors. Additionally, the underwriting practices of TTMF, the originator of the mortgages within the pool, continue to remain good," CariCRIS said.

Furthermore, the legal and regulatory framework which supports this transaction also provides adequate protection to investors.

CariCRIS, however, noted that the ratings are tempered by the possibility that the seasoning of the underlying mortgage pool could increase default risk over the life of the structured debt obligation.

The CMO is a structured finance debt instrument issued by the HMB to securitise residential mortgage assets purchased from the TTMF on the secondary market.

CMO 2022-01 offers participation certificates in four tranches in the amount of $100 million.

Last month, the TT Mortgage Bank (TTMB), a merger between TT Mortgage Finance Company Ltd (TTMF) and the Home Mortgage Bank (HMB), was launched in a grand celebration at the Hyatt Regency, Port of Spain.

The merger was officially completed on January 17, with the TTMF buying 100 per cent of HMB shares from the National Insurance Board.