Structured Finance

CRISIL assigns ratings to

  • Securitisation transactions through the pass through certificate (PTC) route
  • Structured obligation transactions

Securitisation transactions through PTC route

CRISIL’s ratings on PTCs indicates the relative degree of risk associated with timely servicing of financial obligations on the PTCs, as per the terms of the securitisation transaction. The ratings reflect the sufficiency or not of credit enhancement to cover shortfalls in pool collections compared with scheduled investor payouts for a specific credit rating. The ratings on PTCs carry the suffix '(SO)' to indicate that the instruments have a structured obligation.

CRISIL rates PTCs issued by a wide range of entities such as:

  • Banks
  • NBFCs
  • Infrastructure entities
  • Microfinance institutions
  • Urban local bodies

CRISIL’s criteria and framework seek to ensure that the ratings assigned factor in all the key risks that investors are exposed to in these transactions, and specifically captures the nuances of the underlying asset class.

CRISIL enjoys a leadership position in the Indian Securitization rating market and has the experience of assessing securitization transactions since 1992. It has evaluated over 150 originators, with a strong understanding of over 15 asset classes across economic cycles. This is supported by a strong track record of having a high one-year stability rate of 98.2% [SS1] for transactions rated AAA (SO) by CRISIL between 1992 and 2013.

CRISIL is the first rating agency in India to assign ratings on asset-backed securities in 1991 and mortgage-backed securities in 2000.

Structured obligation transactions
CRISIL may use an (SO) suffix to ratings to indicate ‘structured obligation’, where the credit rating on an instrument is enhanced over and above the issuer rating by means of a structure or mechanism. This credit enhancement, that supports the payment of interest and principal on the instrument, may be internal or external. SO ratings apply only to instruments, and not to the companies issuing them.


These innovative instruments play a critical role in the Indian bond market by creating a bridge between issuer’s credit quality and investor expectations, through the mechanism of credit enhancement in one or more ways:

  • Partial credit guarantee mechanism
  • Securitisation of annuity receivables
  • Commercial mortgage backed securities
  • Securitization of future flow receivables

CRISIL has developed detailed rating criteria and methodology to evaluate the risks associated with these innovative instruments. It has been at the forefront of innovation, by being the first rating agency globally to assign a rating based on the partial guarantee in 2001.

CRISIl is also credited with rating India’s first commercial mortgage backed security issue (or CMBS, issued in the form of NCDs) by DLF Emporio Ltd and DLF Promenade Ltd (part of DLF Group), and India’s largest future flow securitization transaction by IOT Utkal Energy Services in 2014.

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