|
Detailed Rationale CRISIL Ratings has converted the provisional rating assigned to Series A Pass-Through Certificates (PTCs) issued by ‘SHRI Trust AK 2023’ to a final rating of 'CRISIL AAA (SO)'.
The PTCs were issued under a securitisation transaction backed by receivables from new and used medium and heavy commercial vehicles (MHCV), intermediate, light, and small commercial vehicles (ILSCV), construction equipment and material handling equipment (CE & MHE), and machinery loans originated by Sundaram Finance Ltd. (SFL; rated ‘CRISIL AAA/Stable/CRISIL A1+’). The rating/credit opinion is based on the credit support available to the PTCs, credit quality of underlying receivables, SFL’s origination and servicing capabilities, the payment mechanism, and soundness of the transaction’s legal structure.
CRISIL Ratings has now received the final legal/executed documents for this transaction, as listed below. These executed documents are in line with terms of the transaction envisaged when provisional rating was assigned. Hence, CRISIL Ratings has converted the provisional rating to a final rating.
Legal Documents
Other Documents
The transaction has a ‘Par with Excess Interest Spread (EIS)’ structure. SFL has assigned the pool to ‘SHRI Trust AK 2023’, settled by IDBI Trusteeship Services Limited (ITSL), which has issued the PTCs to investors, where scheduled payouts to investors have been arrived at, assuming a staggered basis of transfer of collections by the servicer, i.e. of all receivables comprising the principal amount due in a particular month (say, month M). 80% of the said principal amount shall be credited to the collection and payout account on the ascertained date of month M+1, and 20% of the said principal amount shall be deposited in the collection and payout account on the ascertained date of month M+2.
The PTCs are supported by the cash collateral – in the form of fixed deposit – and excess interest spread. The total credit support available in the transaction is as below:
Series A PTC holders are promised timely interest payments on a monthly basis. Principal repayment, while expected on a monthly basis, is promised only on an ultimate basis by the last payout date. |
Key Rating Drivers & Detailed Description Strengths:
Weakness:
|
Liquidity position is strong given that the credit enhancement (internal and external combined) in the structure is above 1.5 times the estimated base shortfalls on the residual pool cash flows. These aspects have been factored by CRISIL in its rating analysis. |
Rating Sensitivity factors Upward factors:
Downward factors:
|
About the Pool The securitised pool comprises receivables from new and used MHCV, ICV, LCV, SCV, CE (including material handling equipment), and machinery loans. The pool had a healthy seasoning profile, as evidenced by its weighted average net seasoning of 12.4 months and amortisation of 30.6% as of the pool cut-off date. Geographic concentration is moderate, with the top three states accounting for 55.9% of the initial pool principal as of the pool cut-off date. Average ticket size is Rs 20.7 lakh on account of higher proportion of new MHCVs and CE, with a weighted average interest rate of 9.6% and loan to value ratio of 82.4% as of the pool cut-off date. Pool contracts had no overdues as of the pool cut-off date, with 97.7% of the initial pool principal arising from contracts that had not exhibited any instance of delinquency prior to the pool cut-off date. CRISIL Ratings has adequately factored all these aspects into its rating analysis.
Counterparty details
Past rated pools CRISIL Ratings has ratings outstanding on four transactions originated by SFL. CRISIL Ratings is receiving monthly servicer and payout reports from the Trustee for this transaction |
Key Financial Indicators
|
Any other information |
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 ^Scheduled EIS amounting to Rs 8.96 crore at the time of securitisation (assuming zero prepayments) also provides credit support to PTCs. $Series A PTC holders are promised timely interest payments on a monthly basis. Principal repayment, while expected on a monthly basis, is promised only on an ultimate basis by the last payout date.. |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
Criteria Details
|