The delinquency levels for the loan pool in the 12 months since securitisation have been higher than expected, with collections significantly below expectations. This has led to the rating revision for pass through certificates (PTCs) series A13 (Rs 105.73 crore) and A14 (Rs 98.2 crore), Crisil said in a statement. Prasad Koparkar, head of structured finance rating with Crisil, said there is no default on payment to PTC investors. There is enough credit enhancement cushion for payment to investors in securities. |
For example, while securitising loans, the cushion will be in multiple of expected defaults rate. For Rs 100 crore loan pool if the expected default rate is Rs 5 crore, then the credit enhancement will be three-four times the default rate, he added.
The rise default in personal and vehicle loans extended by banking and financial entities is on expected lines and there is no panic. As banks move away from the saturated safe loan market, the default rate is set to go up, as they are wooing the relatively higher risk segment (self employed). But these loans also carry higher interest rates "" reflecting risks and higher transaction costs.
All the PTCs are backed by a pool of new car and personal loan receivables originated and serviced by ICICI Bank. The rating outfit reaffirmed the outstanding ratings on 16 other PTCs. The reaffirmed papers carry AAA (So) rating.
