We noted last week, following the release of Standard & Poor's RMBS arrears data for November 2009, the low point in arrears or delinquencies may have been reached, largely due to the upward movement in interest rates that has occurred since and will continue.  However, this comment was not intended to pre-empt the release of reports by each of the three rating agencies on the outlook for 2010. In any event, the outlook reports cover the whole structured finance sector and not just RMBS.  Commenting specifically on Australian RMBS, in its Asia-Pacific Structured Finance 2010 Outlook, S&P observed that while there may be on-going sensitivity to rising interest and/or unemployment rates, any rating actions in the sector are more likely to stem from counterparty risks over the next twelve months. However, the opposite is likely to be true for the subordinated classes of subprime RMBS.Similarly, in New Zealand, ratings on prime RMBS and the senior tranches of subprime RMBS are expected to be stable but the subordinated classes of subprime RMBS will be vulnerable to downgrade risk.The outlook for ABS is stable, supported by the rapid amortisation of the underlying portfolios, but CMBS may well be negatively impacted by the concentration of refinancing risk this year.  Fitch Ratings in its "Australian Structured Finance 2010 Outlook" report was a little more cautious, stating that the improvement in structured finance asset performance experienced in 2009, thanks to historically low interest rates and a resilient economy, is unlikely to continue during 2010. However, Australian structured finance ratings are expected to remain largely stable during 2010 as a result of the structural features within existing transactions.Fitch expects that the three consecutive interest rate rises which took place in the last quarter of 2009, coupled with the prospect of further rises during 2010, will raise the number of delinquencies. However, the effect of rising interest rates will be partly offset by improving economic growth and Australian residential house prices, which are expected to remain stable or slightly higher during 2010, helping to mitigate losses within RMBS transactions. Rising interest rates are also expected to negatively impact CMBS and ABS asset performance during the year.Non-conforming RMBS and CMBS are expected to come under the most rating pressure, mainly due to rising interest rates, the continuing rationing of credit by lenders, and the ongoing asset performance within certain transactions. Moody's was more optimistic in its report, "2009 Review and 2010 Outlook: Australian Structured Finance: Signs of Recovery; Enduring Challenges Ahead". Moody's said that sound asset quality and robust transaction structures support a stable outlook for the collateral performance of Australian RMBS, CMBS and ABS, aided by improved expectations for the Australian economy. Moody's contends that in the prime RMBS market, housing delinquency rates have retreated to pre-crisis levels and are not expected to climb back to their record highs in the foreseeable future. As for non-conforming RMBS, the rating outlook is also stable, as current levels of credit enhancement provide most deals with sufficient buffer to withstand