The National Housing Bank (NHB) has closed its second mortgage-backed securities (MBS) issue amounting to Rs 91.69 crore. The pass through certificates (PTCs) issued by NHB to institutional investors carries a coupon rate of 10.25 per cent per annum that is payable on a monthly basis.
The MBS issue, which was originated by LIC Housing Finance Ltd and Canfin Homes Ltd, comprised 8,549 individual housing loans of these two housing finance companies involving Rs 137.62 crore.
The 'Class A' PTCs that have been issued to investors in respect of a pool of housing loans of LIC Housing Finance (LIC HF) is for Rs 46.84 crore, while that of Canfin Homes is for Rs 44.85 crore.
These PTCs have been rated AAA (structures obligation) by credit rating agency Crisil, indicating highest degree of safety with regard to timely payment of the financial obligations on the instruments.
The 'Class B' PTCs will be subscribed entirely by the originators (LIC HF and Canfin Homes) and are structured to act as credit enhancement for the Class A PTC holders.
An MBS transaction involves assignment of a pool of retail housing loans from the housing finance companies to the NHB. The loans, repayable in equated monthly installments, are packaged and offered to investors as PTCs by NHB.
The PTCs are in the nature of trust certificates and represent proportionate undivided beneficial interest in the pool of housing loans.
The pool of housing loans, which constitute the receivables to be securitised, will be held by NHB in its capacity as a special purpose vehicle in the nature of a trust.
SBI Capital Markets, ICICI Securities & Finance Co, DSP Merrill Lynch, ABN Amro Securities and UTI Securities were the lead arrangers to the issue.
