Rating agency Crisil has placed the Indian retail securitisation market ahead of many countries, particularly the US, on the back of a superior profile of assets securitised in the country amid global meltdown. The rating agency said financial instruments created out of securitised assets in India are far less complex than those in developed markets.
With few rating downgrades, the Indian market has shown greater stability and has zeo losses on investor payouts, Crisil said. It, however, added that the size of the Indian market is very small compared with that of the United States.
“From the highest rating of AAA for structured instruments, only about 2 per cent of instruments have been downgraded over a one-year time-frame. This is quite comparable with the behaviour of Crisil’s AAA ratings for other instruments,” said Ajay Dwivedi, director, structured finance ratings, Crisil.
“The most significant factor characterising securitisation in India is the robustness of the underlying retail assets. Unlike in the US, there has been no securitisation of subprime housing loans in India” the agency added. Crisil also said investors in securitised paper in India have no reason to fear crippling losses of the kind that have hit their US counterparts.
Loans that have been securitised in India are those for commercial vehicles, cars, two-wheelers and homes, to some extent. The Indian market is relatively immune to asset-price fluctuations, Crisil said.
However, the agency added that the collection behaviour of retail loans has worsened over the past two years. Car and commercial vehicle pools had two percentage points lower collections than those on older pools at a similar stage.
