Crisil Ratings has reaffirmed its rating of ‘Crisil AAA (SO)’ for Series A pass-through certificates (PTCs) issued by ‘Platinum Trust June 2023 - Tranche III and upgraded its credit opinion to ‘Crisil A (SO) Equivalent’ from 'Crisil BBB+ (SO) Equivalent’ for second loss facility. The transaction is backed by receivables from a pool of vehicle, tractor and construction equipment loans originated by Cholamandalam Investment and Finance Company Limited (CIFCL; rated ‘Crisil A1+’). The rating/ credit opinion is based on the credit support available to the PTCs, credit quality of underlying receivables, CIFCL’s origination and servicing capabilities, the payment mechanism, and soundness of the transaction’s legal structure.
Payment structure: The transaction has a ‘Par with EIS’ structure. CIFCL has assigned the loan pool to ‘Platinum Trust July 2023 - Tranche III’, a Trust settled by the transaction’s Trustee, in exchange for a purchase consideration amounting to 100.0% of the initial pool principal as on the cut-off date. Series A PTC payouts are supported by credit collateral in the form of fixed deposits and EIS. IDBI Trusteeship Services Limited (ITSL) has been appointed to monitor the overall transaction on behalf of the PTC investors. Series A PTC holders are entitled to receive timely interest and timely principal payments on a monthly basis.
Adequacy of credit enhancement: The investor payouts for Series A PTCs are supported by cash collateral split into first loss facility and second loss facility and subordination of excess interest spread (EIS). On a monthly basis, the cash collateral can be used to make the promised payments to Series A PTCs in case of a shortfall in collections from the pool. All prepayment collections will be utilised for accelerated redemption of the Series A PTCs.
Credit enhancement available in the transaction structure to support promised PTC payouts is as below:
Based on Crisil Ratings assessment, the total credit enhancement available in the transaction (internal – in the form of EIS; and external – in the form of cash collateral) provide loss absorption against stressed shortfalls in the pool, commensurate with the outstanding ratings.
The pool has exhibited good collection performance as seen by strong collections ratios. The cumulative collection ratio (CCR)[1] for the pool is robust at 98.1%. This has led to minimal delinquencies in the pool as reflected in 0+ overdue of 1.2%. The healthy collection performance coupled with high amortisation of around 67.0% has led to an increase in the credit cover available to future PTC payouts from the cash collateral.
The pool is eligible for reset of credit enhancement. Crisil Ratings has evaluated the reset in line with regulatory guidelines. However, investor consent is yet to be received. On receiving consent of the investor and trustee, a maximum amount of Rs 13.93 crore (40.7% of the current total cash collateral) can be released from the credit enhancement in proportion of Rs. 6.70 crore from First Loss Facility and Rs. 7.22 crore from Second Loss Facility.
[1]CCR = {Total collections in the pool/(Total billings + opening overdues at the time of securitisation)} |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
|
Liquidity: Strong Liquidity is strong given that the credit enhancement available in the structure is sufficient to cover losses exceeding 1.5 times the currently estimated base shortfalls. |
Rating Sensitivity factors Upward factors
Downward factors
Quality of the asset pool and strength of cashflows At the time of securitisation, the transaction was backed by a pool of commercial vehicle and construction equipment loans receivables originated by CIFCL. At the time of securitisation, the pool had a weighted average seasoning of 25.1. The pool has moderate geographic concentration with top three states accounting for 25.0% of pool principal. Average ticket size is Rs 5.8 lakhs with weighted average interest rate of 13.5%. All the contracts in the pool were current as on pool cut-off date (May 31st, 2023)
Assuming no prepayments, cashflow schedule results in subordination in the form of EIS amounting to Rs 8.10 crore (4.2% of the future PTC payouts). Asset class wise performance portfolio performance of CIFCL has been highlighted in the Rating assumptions section below. Based on Crisil Ratings assessment, the total credit enhancement available in the transaction (internal – in the form of EIS; and external – in the form of cash collateral) provide loss absorption against stressed shortfalls in the pool, commensurate with the rating assigned to the PTCs.
Pool Performance Summary (as after February 2025 payouts)
|
About the Originator – Originator/Servicer profile Part of the Chennai-based Murugappa group, Chola Finance was incorporated in 1978. The company provides vehicle financing and LAP as well as home loans, MSME and agricultural loans. It has ventured into new businesses in the consumer and MSME ecosystems, namely CSEL, SBPL and SME finance in the second half of fiscal 2022. It had 1,577 branches across 29 states in India, with 85% presence across tier III to tier VI cities, as on December 31,2024.
Between April 2005 and March 2010, the company operated as a joint venture between DBS Bank and the Murugappa group. In March 2010, DBS Bank sold its 37.5% equity stake to the Murugappa group. Chola Finance exited the unsecured personal loan segment in October 2008 and subsequently from the asset management business. The Murugappa group holds 51.6% equity stake in Chola Finance, of which 45.5% is held by Cholamandalam Financial Holdings Ltd, a group company.
Chola Finance has two subsidiaries: Cholamandalam Securities Ltd and Cholamandalam Home Finance Ltd, a joint venture with Payswiff Technologies Pvt Ltd and three associates: White Data Systems India Pvt Ltd, Vishvakarma Payments Pvt Ltd and Paytail Commerce Pvt Ltd.
For 9M 2025, profit after tax (PAT) was Rs. 2,991 crore on total net income (net of interest expense) of Rs. 9,811 crore as against a PAT of Rs. 2,364 crore and a total net income of Rs. 7,073 crore, respectively, for the corresponding period of the previous fiscal. |
Key Financial Indicators
Quality and experience of servicer CIFCL (rated ‘Crisil A1+’) will continue to service loans assigned to this trust. CIFCL has originated several securitisation transactions over the last two decades. Servicing has been done, and reports have been shared across all these transactions in a timely manner.
Risks and concerns for investors and mitigating factors: Based on Crisil Ratings’ assessment, the total credit enhancement available in the transaction (internal – in the form of EIS; and external – in the form of cash collateral) together can mitigate against shortfalls in collection from the pool even after stressing them commensurate with the rating assigned to the PTCs. Crisil Ratings has adequately factored key risks in the transaction including Credit & Market (as highlighted in rating assumptions section), Counterparty and Legal risks. Legal risks are assessed based on detailed analysis of transaction documentation. Risk factored from counterparties are mentioned in the table below:
Counterparty details
A summary of key terms of servicer contract The key points on the role of the servicer covered as part of the transaction documents are as below:
Performance of outstanding rated transactions Crisil Ratings has ratings outstanding on instruments issued under 15 securitisation transactions backed by CIFCL-originated loans. The cumulative collection efficiency in the underlying pools for these transactions are higher than ~98% as of February-2025 payouts, with 90+ delinquency remaining at or below 1.3% of the initial pool principal. |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
#Indicates legal final maturity date for the instrument. Actual maturity date will depend on the level of collection shortfalls in the pool, the level of prepayments in the pool, and exercise of the clean-up call option. @Includes a second loss facility of Rs. 18.23 crore |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Criteria Details
|