Detailed Rationale Crisil Ratings has reaffirmed its rating on PTCs issued by ‘Sun CV Trust Dec 2023’ at ‘Crisil AAA (SO)’. The transaction is backed by vehicle loan receivables originated Indostar Capital Finance Limited (Indostar; rated ‘Crisil AA-/Stable/Crisil A1+’).
The reaffirmation follows the build-up of credit cover available to PTC holders on account of amortisation and healthy pool performance. The rating is based on the credit support available to the PTCs, credit quality of underlying receivables, IndoStar’s origination and servicing capabilities, the payment mechanism, and soundness of the transaction’s legal structure.
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 96.6%. This has led to minimal delinquencies in the pool as reflected in 0+ overdue of 1.8% of initial pool principal. The healthy collection performance coupled with pool amortisation (% of initial principal securitised) of 52.0% has led to an increase in the credit cover available to future PTC payouts from the cash collateral.
The transaction is supported by external credit enhancement in the form of a fixed deposit amounting to Rs. 20.40 crore, which covers 25.7% of scheduled future payouts to investors (as after Jan-2025 payouts), in addition to the subordinated excess interest spread (EIS).
The transaction has a 'Par with turbo amortisation' structure. Investors 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 instrument’s legal final maturity. The residual cashflows shall be utilised to make additional principal repayment to Series A1 PTCs on a monthly basis.
The transaction is eligible for reset of external credit enhancement. Crisil Ratings has evaluated the reset in line with regulatory guidelines. On receiving consent of the PTC investors and the transaction’s Trustee, a maximum amount of Rs 4.55 crore (22.3% of the outstanding external credit enhancement at present) can be released.
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Key Rating Drivers & Detailed Description Strengths:
Weakness:
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Liquidity: Strong Liquidity position is strong given that the credit enhancement (internal and external combined) in the structure is above 2.5 times the estimated base shortfalls on the residual pool cash flows. |
Rating Sensitivity factors Upward Factors
Downward Factors
About the Pool The securitisation transaction is backed by a pool of used and new vehicle loan receivables originated by IndoStar. As of the pool cut-off date, pool loans had a weighted average seasoning of 13.8 months (measured from the first instalment date to cut-off date) and a weighted average original tenure of 40.5 months. The pool loans had an average disbursement amount of INR 5.6 lakh, with a weighted average IRR of 18.4% and a weighted average LTV of 71.7%. Loans originated in the top 3 states (Tamil Nadu, West Begal, Gujarat) accounted for 49.9% of the initial pool principal. As of the cut-off date (Novmeber 30, 2023), all pool loans were current on repayment and had not displayed any instances of delinquency since disbursement.
Pool Performance Summary (as after Jan-2025 payouts)
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Counterparty details
About the Originator IndoStar Capital, incorporated in July 2009, is registered with the Reserve Bank of India as a systemically important, non-deposit taking, non-banking financial company. The company was founded and incorporated by private equity players (Everstone, Goldman Sachs, Baer Capital Partners, ACPI Investment managers, and CDIB International) with initial capital of around Rs 900 crore. In May 2020, Brookfield invested Rs 1,225 crore and became the largest shareholder and promoter. Brookfield holds 56.20% stake in the company, followed by the Everstone group at 17.4%.
The company started the business as a wholesale financier in fiscal 2011 and entered the SME finance (loans against property) segment in fiscal 2015. In fiscal 2018, it started offering vehicle finance and housing finance (through wholly owned subsidiary, IndoStar Home Finance Pvt Ltd). In fiscal 2019, IndoStar Capital acquired the CV finance business of IIFL Finance Ltd. The company plans to focus on used CV financing and affordable housing finance. |
Key Financial Indicators
Performance of previously rated transactions Crisil ratings has ratings outstanding on instruments issued under 6 securitisation transactions backed by IndoStar-originated loans. Crisil ratings receives monthly performance reports pertaining to these transactions. |
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. |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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