Salvador 02 2025 (Originator: Satin Creditcare Network Limited)
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 @ 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' and April 27, 2021 circular ‘Standardizing and Strengthening Policies on Provisional Rating by Credit Rating Agencies (CRAs) for Debt Instruments’ issued by Securities and Exchange Board of India (SEBI). |
Detailed Rationale Crisil Ratings has assigned its ‘Provisional Crisil AA (SO)’ rating to Series A1 pass-through certificates (PTCs) issued by ‘Salvador 02 2025’. The transaction is backed by a pool comprising microfinance loan receivables originated by Satin Creditcare Network Limited (SCNL; Not rated by Crisil). The ratings are based on credit support available to PTCs, credit quality of the underlying pool receivables, SCNL’s origination and servicing capabilities, and soundness of the transaction’s legal structure.
Payment Structure: The transaction has a ‘Par with Excess Interest Spread (EIS)’ structure. DCL will assign the loan pool to ‘Salvador 02 2025’, a trust settled by Catalyst Trusteeship Limited, which will issue instruments to investors in exchange for a purchase consideration equal to 88.0% of future pool principal outstanding as on the cut-off date (February 18, 2025).
Series A1 PTC holders are promised timely interest on a monthly basis and principal on ultimate basis on the maturity date of the PTCs. Investor payouts for PTCs are supported by cash collateral, overcollateralization, subordinated unrated equity tranche and subordination of excess interest spread (EIS).
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. |
Key Rating Drivers & Detailed Description Strengths:
Weakness:
[1]2 biweekly instalments taken as 1 emi |
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 factor:
Downward factor:
|
Quality of the asset pool and strength of cashflows The transaction is backed by microfinance receivables originated by SCNL. The contracts in the pool have weighted average seasoning of 10.3 months, consequently, the pool is amortised by 34.7% as of the cut-off date. The pool is geographically concentrated with the top 3 state accounting for 62.9% of pool principal. The average ticket size for contracts in the pool is Rs 59,288. All the contracts in the underlying loan pool are current as of the cut-off date (February 18, 2025).
Additional disclosures for Provisional ratings: The provisional rating is contingent upon execution of the following 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 |
About the Originator Satin Creditcare Network Limited (SCNL or Satin) is a leading microfinance institution (MFI) in the country with presence in 29 states & union territory and around 95,000 villages. The company’s mission is to be one stop solution for excluded households at the bottom of the pyramid for all their financial requirements. The company also offers financial products in the Non‐MFI segment comprising loans to MSMEs and housing finance through its subsidiaries Satin Finserv Ltd. and Satin Housing Finance Ltd.
Key Financial Indicators
*annualised
Quality and experience of servicer SCNL will continue to service loans assigned to this trust. SCNL has originated several securitisation transactions. 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:
A summary of key terms of servicer contract
As per indicative transaction terms, the key points on the role of the servicer to be covered as part of the transaction documents are as below:
Provision for appointment of back-up servicer: The Trustee (acting on the instructions of the investors) as per the terms of the Servicer Agreement and upon the occurrence of Servicer’s Event of default, shall retain the right to appoint an alternate servicer
Performance of outstanding rated transactions Crisil Ratings has ratings outstanding on instruments issued under 8 securitisation transactions backed by SCNL-originated loans as of January-2025 payout. The median cumulative collection efficiency for these transactions is 93.4% and the lowest being 89.8%, with median 90+ delinquency (includes interest overdues) at 7.2% of the initial pool principal and the highest being 10.2%. |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
^ISIN not received |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
Criteria Details
|