Citibank has launched a personal loan securitisation for the first time in India. The issue is in the nature of a pass through certificates (PTC) and has a corpus of Rs 28.41 crore. The securitisation is split into individual securities of smaller value that can be sold to investing public. These securities are called by different names such as pay through certificates, pass through certificates, interest only certificates and principal only certificates.
Nearly 85 per cent of the assets backing Citibank's issue is loans to salaried class, while the rest are loans given to self-employed professionals. Geographically 59 per cent of the assets are located in western India, while 40 per cent is based in the north.
The issue will have three series A1, A2 and A3 which mature after 12 months, 24 months and 57 months, respectively. The class A3 PTC holder will have a put option after 36 months. The average maturity of A1 and A2 and A3 series are 6.45, 18.42 and 31.75 months, respectively.
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Series A1 is rated P1+ (so) by Crisil, while the other two series are rated AAA (so). The issue will close on July 29. Citicorp Brokerage is the arranger of the issue.
The credit enhancement for the transaction has been provided by a cash collateral of Rs 2.3 crore and subordination of excess interest spread, which comes from the difference in the interest rate on the underlying securities and the PTC coupon rate.
Citibank has adopted the book-building route for the securitiastion. The coupon for A1 series will be in the range of 8.5 per cent to 9 per cent, while range for A2 series is 9 per cent to 9.25 per cent. For the A3 series, the band is 9.75 per cent to 10.25 per cent. PR Seshadri, marketing director, consumer loan said the bank is expected to strike the deal at the lower ends of the bands.
Seshadri said: "The assets are cherry-picked and all of them are performing. This is a pilot project and we may come out with many more issues after the successful completion of this."
Earlier Citibank had raised Rs 75 crore from the market through another securitised debt at a coupon of 9.38 per cent. The issue had four PTCs with maturities of six months, 12 months, 24 months and 31 months. The issue is securitised by the receivables from the auto-loan portfolio of Citicorp India Finance Ltd. The consolidated total maturity of the issue is 31 months and the average maturity is 12.6 months.