ICICI Bank multiple-asset pool gets first AAA rating

For the first time in the Indian securitisation market, a multiple-asset pool has witnessed an upgrade to the AAA level from AA-(so). The asset pool of Rs 22.12 crore is backed by a pool of corporate loan receivables originated by ICICI Bank, rating agency Crisil said.

The upgrade was possible as the credit enhancement provided by ICICI Bank became more than sufficient for a triple A level of safety. The upgrade reflects full coverage provided by the cash collateral to future investor payouts.

ICICI Bank had securitised the pool of assets in January 2004 as part of India's first multi-asset securitisation transaction. The issue was among the few securitisation deals with AA-rating.

"This pool was one of the few where credit enhancement at the launch of securitisation was not maintained at a high level to attain a triple A rating. Since all the borrowers in the underlying pool paid on time, the credit enhancement was never used and the amount then helped the asset pool gain a triple A rating," a Crisil official said.

The originators of securitised assets till recently tended to provide a greater degree of credit enhancement so as to achieve the highest rating.

But this raised concerns in the Reserve Bank of India (RBI). The credit enhancement is used to meet any shortfall in the monthly or quarterly payments to investors due to non-payment of any of the borrowers.

Crisil Managing Director and CEO R Ravimohan said the upgrade shows that the securitisation market in India is maturing. Though it is a technical development, investors required to make provisions will gain on account of the upgrade, he added.