Bullseye 04 2025 (Originator: Muthoot Microfin 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 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 Detailed Rationale Crisil Ratings has assigned its ‘Provisional Crisil AA+ (SO)’ rating to Series A1 pass-through certificates (PTCs), issued by ‘Bullseye 04 2025’ under a securitisation transaction originated by Muthoot Microfin Limited (MML; rated ‘Crisil A+/Stable/Crisil A1+’), backed by a pool comprising microfinance loan receivables originated by MML.
The ratings are based on credit quality of the pool backing the transaction, the origination and servicing capabilities of MML, credit support available to the PTCs, payment mechanism for the transaction, and soundness of the transaction’s legal structure.
Payment Structure: The investor payouts for PTCs are supported by cash collateral and subordination of over collateral principal and excess interest spread (EIS). On a monthly basis, the cash collateral can be used to make the promised interest payments in case of a shortfall in collections from the pool to PTCs. On the final maturity date, the cash collateral can also be used to make the promised principal repayment in case of a shortfall in collections from the pool. The trust settled by the transaction’s Trustee, i.e. Catalyst Trusteeship Limited will issue Series A1 PTCs in exchange for a purchase consideration equal to 86.5% of the pool principal at the time of securitisation.
The transaction also has some pre-defined triggers which if met, will lead to utilisation of EIS for accelerated principal amortisation of the PTCs.
Adequacy of credit enhancement Credit enhancement available in the transaction structure for Series A1 PTC:
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Key Rating Drivers & Detailed Description Strengths
Weaknesses
− The microfinance industry remains susceptible to risks arising out of socio-political issues and regulatory changes. Such events have the ability to disrupt loan repayments of underlying borrowers. The unsecured nature of microfinance loans and inherent modest credit risk profile of the borrowers have been considered by Crisil Ratings in its analysis.
These aspects have been adequately factored in its rating analysis by Crisil Ratings. |
Liquidity: Strong Rating Sensitivity Factors Upward factors
Downward factors
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Quality of asset pool and strength of cashflows The transaction is backed by microfinance receivables originated by MML. The contracts in the pool have weighted average seasoning of 5.6 months, consequently, the pool is amortised by 19.5% as of the cut-off date. The pool is geographically concentrated with the top 3 state accounting for 47.1% of pool principal. The average ticket size for contracts in the pool is Rs 57,752. All the contracts in the underlying loan pool are current as of the cut-off date (April 24, 2025).
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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 MML, a part of 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 as MML.
In March 2015, MML received an NBFC-MFI licence from the Reserve Bank of India. As on March 31, 2025, MFL held 50.2% equity in MML, followed by its promoters, who held 5.3%. 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 12,356 crore and networth of Rs 2,632 crore as on March 31, 2025. 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, Himachal Pradesh and Telangana. |
Key Financial Indicators
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Quality and experience of servicer MML will continue to service loans assigned to this trust. MML 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 overcollateralisation; 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: |
Counterparty details
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 |
Any other information: Not applicable |
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 ^Additional credit support includes Rs 20.22 crore (assuming zero prepayments) in the form of scheduled cashflow subordination for Series A1 PTCs – including Rs 17.86 crore of principal overcollateralization. $instruments yet to be issued. |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
Criteria Details
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