Triumph Trust 2024

(Originator: Muthoot Microfin Limited) 

'Provisional CRISIL AA+ (SO)' assigned to Series A1 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 12.

@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.

About the Pool

The transaction is backed by microfinance receivables originated by MML. The key pool characteristics are outlined below:

• The contracts in the pool have weighted average seasoning of 6.0 months, which has led to principal amortisation of 22.2% as of the pool cut-off date.
• The pool is diversified in terms of geography with the top 3 state and top 3 districts accounting for 53.0% and 7.2% of the pool principal respectively.
• The average ticket size for contracts in the pool is Rs 54,146, with a weighted average interest rate of 24.7%.
• All the contracts in the underlying loan pool were current as of the cut-off date (May 10, 2024).

Counterparty details

Transaction waterfall mechanism

Series A1 PTC holders are promised timely interest on a monthly basis and principal on ultimate basis on the maturity date of the PTCs. The collections from the pool, including the internal subordination through overcollateral as well as EIS, will be used to make promised interest payouts to PTC holders, followed by expected principal payouts as per the scheduled monthly principal collections.

However, in case of a collection shortfall, while the cash collateral can be used to make the promised interest payouts, any shortfall in expected principal collections will be carried forward as arrears. The cash collateral can be utilised to meet any outstanding principal arrears on the maturity date of the PTCs.

Any prepayments will be utilised for accelerated redemption of PTCs.

The EIS would normally flow back to the originator after meeting the promised interest payouts and expected principal payouts to PTCs.

Additional disclosures for Provisional ratings:

The provisional rating is contingent upon execution of the following documents:

• Trust Deed
• Assignment Agreement
• Servicing Agreement
• Accounts Agreement
• Power of Attorney
• Information Memorandum
• Legal opinion
• Auditor’s certificate(s)
• Trustee’s letter
• Originator’s Representations and Warranties letter

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

MML, a part of Muthoot Pappachan Group (MPG), provides microfinance loans to women. MPG started its microfinance operations in 2010 as a separate division of MFL, the flagship company of the group. In December 2011, the group acquired a Mumbai-based non-banking financial company (NBFC), Pancharatna Securities Ltd, and renamed it MML. In March 2015, MML received an NBFC-MFI license from the RBI. As on September 30, 2023, MFL held 50.2% equity and MFL's promoters held 5.3% in MML. Along with the promoters, MML's board includes one member nominated by Creation Investments and Greater Pacific Capital and four independent directors.

MML had AUM of Rs 11,438 crore and networth of Rs 2,678 crore as on December 31, 2023. Operations of the microfinance division are spread across Kerala, Tamil Nadu, Puducherry, Karnataka, Maharashtra, Gujarat, Haryana, Rajasthan, Uttarakhand, Madhya Pradesh, Uttar Pradesh, Odisha, West Bengal, Punjab, Chhattisgarh, Jharkhand, Bihar and Himachal Pradesh.

Key Financial Indicators

*annualised

Performance of past rated pools

CRISIL Ratings has ratings outstanding on 17 other securitisation transactions originated by MML. The cumulative collection ratios in these pools range from 95.9% to 99.0% and 90+ delinquencies (including overdues) have been below 5.0% for all transactions as of May 2024 payouts.

Any other information: Not Applicable

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

^Additional credit support includes Rs 47.99 crore (assuming zero prepayments) in the form of scheduled cashflow subordination for Series A1 PTCs – including Rs 22.19 crore of principal overcollateralization.

$instruments yet to be issued.

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