Montana 09 2024 (Originator: Muthoot Capital Services Limited) 'Provisional CRISIL AA (SO)' assigned to Series A1 PTCs; 'Provisional CRISIL A+ (SO)' assigned to Equity Tranche PTCs
Rating Action
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. 1 crore = 10 million Refer to Annexure for Details of Instruments & Bank Facilities #Indicates door-to-door tenure; actual tenure will depend on the level of prepayments in the pool, exercise of clean-up call option and the extent of shortfalls *Additional credit support includes Rs. 7.48 crore in form of scheduled cash flow subordination (assuming zero prepayments) – including Equity Tranche PTCs of Rs. 1.51 crore (6.0% of pool principal) and overcollateralization of Rs. 1.51 crore (6.00% of pool principal) ^Additional credit support includes Rs. 5.97 crore in form of scheduled cash flow subordination (assuming zero prepayments) – including overcollateralization of Rs. 1.51 crore (6.00% of pool principal) $Equity tranche PTCs investors are expected to receive residual yield on a monthly basis, however, the rating on Equity tranche PTCs only addresses the likelihood of principal repayment, and not the payment of residual yield @A prefix of 'Provisional' indicates that the rating centrally factors in the strength of specific structures, and is contingent upon occurrence of certain steps or execution of certain documents by the issuer, as applicable, without which the rating would either have been different or not assigned ab initio. This is in compliance with a May 6, 2015 directive ‘Standardizing the term, rating symbol, and manner of disclosure with regards to conditional/ provisional/ in-principle ratings assigned by credit rating agencies' by Securities and Exchange Board of India (SEBI) and April 27, 2021 circular ‘Standardizing and Strengthening Policies on Provisional Rating by Credit Rating Agencies (CRAs) for Debt Instruments’ by SEBI
Detailed Rationale CRISIL Ratings has assigned its ‘Provisional CRISIL AA (SO)’ rating to Series A1 pass-through certificates and ‘Provisional CRISIL A+ (SO)’ rating to Equity Tranche PTCs issued by ‘Montana 09 2024’. The pool is backed by two-wheeler loan receivables originated by Muthoot Capital Services Limited (MCSL; ‘CRISIL A+/CRISIL PPMLD A+/Stable/CRISIL A1+’). The ratings are based on the credit support available to the PTCs, the credit quality of the underlying pool receivables, MCSL’s origination and servicing capabilities, and soundness of the transaction’s legal structure.
The transaction has a ‘par with monthly subordinated excess interest spread (EIS)’ structure, wherein the trust settled by a trustee will issue Series A1 PTCs and Equity Tranche PTCs in exchange for a purchase consideration equal to 94.00% of the pool principal at the time of securitisation.
Total credit support available in the transaction is as follows:
Series A1 PTC holders are entitled to receive timely interest on a monthly basis while the principal payment is promised on an ultimate basis. Equity Tranche PTC is completely subordinated to Series A1 PTCs Post redemption of Series A1 PTCs , Equity Tranche PTCs investors are also expected to receive residual yield amounts on a monthly basis, however, the rating on Equity Tranche PTCs only addresses the likelihood of principal repayment, and not the payment of residual yield amounts
Transaction has monthly trigger-based turbo amortization. In the event of occurrence of following trigger event: If the PAR90 exceeds 6.00% of the initial pool principal, then 100% of the EIS shall be utilized to make principal payments to the Series A1 PTCs till the time the PAR90 reduces to 6.00% or lower of the initial pool principal. |
Key Rating Drivers & Detailed Description Supporting Factors
Constraining Factors
|
Liquidity: Strong Liquidity position is strong given that the credit enhancement (internal and external combined) in the structure is sufficient to cover losses exceeding 1.5 times the currently estimated base shortfalls. |
Rating Sensitivity factors Upward
Downward
CRISIL Ratings has adequately factored these aspects into its rating analysis. |
About the Pool The pool securitised comprises 2-wheeler loan receivables. The pool has weighted average net seasoning of 11.1 (number of instalments paid). The pool is geographically concentrated with top three states accounting for 80.3% of pool principal. Average ticket size is Rs 86,873 with weighted average interest rate of 23.4%. All the contracts in the pool were current as on pool cut-off date (September 9th, 2024). CRISIL Ratings has adequately factored all these aspects in its rating analysis.
Additional disclosures for Provisional ratings: The provisional rating is contingent upon execution of the following documents, as applicable:
Executed documents:
The provisional rating shall be converted into a final rating after receipt of transaction documents duly executed within 90 days from the date of issuance of the instrument. The final rating assigned post conversion shall be consistent with the available documents. In case of non-receipt of the duly executed transaction documents within the above-mentioned timelines, the rating committee of CRISIL Ratings may grant an extension of up to another 90 days in line with its policy on provisional ratings.
Rating that would have been assigned in absence of the pending documentation: In the absence of documentation considered while assigning provisional rating as mentioned above, CRISIL Ratings would not have assigned any rating.
Risks associated with provisional nature of credit rating: A prefix of 'Provisional' to the rating symbol indicates that the rating is contingent upon execution of certain documents by the issuer, as applicable. In case the documents received deviates significantly from the expectations, CRISIL Ratings may take an appropriate action including placing the rating on watch or a rating change on a case-to-case basis. In the absence of the pending documentation, the rating on the instrument would either have been different or not assigned ab initio.
Counterparty details
About the originator Incorporated in 1994, MCSL is a deposit-taking, systemically important non-banking financial company (NBFC). Though the company started operations in 1995, it commenced lending activities in 1998 after acquiring an NBFC license. Initially, it provided gold loans, but subsequently, as the group scaled up its gold financing business in MFL, MCSL entered the two-wheeler financing segment in fiscal 1998 and gradually exited the gold loan business. MCSL is listed on the Bombay Stock Exchange and the National Stock Exchange and is one of the listed companies of MPG. As on March 31, 2024, its AUM was Rs 2018 crore. Around 88% of the total portfolio was two-wheeler loans. |
Key Financial Indicators
Past rated pools CRISIL Ratings has outstanding ratings on six transactions originated by MCSL. CRISIL Ratings has received the legal documents for the transactions, and receives monthly performance reports pertaining to all CRISIL Ratings-rated MCSL originated securitisation transactions. |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
#Indicates door to door tenure. Actual tenure will depend on the level of prepayments in the pool, and exercise of the clean-up call option |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Criteria Details
|