Detailed Rationale CRISIL Ratings has assigned its ‘Provisional CRISIL AA (SO)’ ratings to Series A1 pass-through certificates (PTCs), issued by EL FIN 012023. The pool is backed by education loan receivables originated by Auxilo Finserve Private Limited (Auxilo, ‘CRISIL A/Stable/ CRISIL A1’). The ratings are based on the credit support available to the PTCs, the credit quality of the underlying pool receivables, Auxilo’s origination and servicing capabilities, and soundness of the transaction’s legal structure.
The transaction has a ‘par with turbo amortisation’ structure, wherein the trust is settled by IDBI Trusteeship Limited (ITSL) and will assign the education loan receivables to ‘EL FIN 012023’ in exchange of a purchase consideration equal to total pool principal at the time of securitisation. The trust settled by ITSL will issue Series A1 PTCs for 94.0% of the pool principal, and Equity tranche for 6.0% of pool principal. Total credit support available in the transaction is as follows:
Series A1 PTCs are entitled to receive timely interest and timely principal, to the extent of 94.0% of the scheduled principal, on a monthly basis. Expected principal, which is 6.0% of scheduled principal, if collected, will be passed to Series A1 PTCs. In addition, the transaction has turbo amortisation structure ie. the residual yield after making expected payouts and topping up credit enhancement, will be used to prepay Series A1 PTCs. Equity tranche is completely subordinated to Series A1 PTCs. IDBI Trusteeship Limited (ITSL) has been appointed to monitor the transaction on behalf of the PTC holders. Auxilo will continue to service the pool contracts as the servicing agent. |
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 1.5 times the estimated base shortfalls on the residual pool cash flows |
Rating Sensitivity factors Upward factors
Downward factors
CRISIL Ratings has adequately factored these aspects in its rating analysis. |
Additional disclosures for the provisional rating This is a ‘provisional’ rating and will be converted into ‘final’ rating based on the receipt 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.
A rating rationale/report indicating the conversion of the ‘provisional’ rating into ‘final’ following receipt of all the required final legal documents will be published on the CRISIL website. Please click on the link below for detailed information on CRISIL’s policy on provisional rating: CRISIL policy for assigning ‘Provisional’ rating.
About the pool The pool securitised comprises of receivables from education loan receivables originated by Auxilo. The pool, at the time of securitization, had a weighted average net seasoning of 19.8 months (No. of EMI instalments paid; calculated from EMI start date). Average ticket size of the contracts in the pool is Rs 20.22 lakh. Majority of the loans in the pool were availed for Science & Engineering courses. Top 3 geographies for which contracts in the pool have availed education loan are USA, Canada, and India, and it contributes to 71.3% of pool principal. The weighted average Fixed Obligation to Income Ratio (FOIR) of co-obligors / borrowers in the pool is 37.4%. All contracts in the pool were current as on the cut-off date (May 31, 2022). CRISIL Ratings has adequately factored all these aspects in its rating analysis.
Counterparty details
About the originator Auxilo, formed on October 4, 2016, was promoted by Mr Akash Bhanshali (ELME Advisors LLP) and Balrampur Chini Mills Ltd (rated: CRISIL AA/Stable) has been a strategic investor – both holding around 45% stake each. The company received NBFC registration from RBI on May 3, 2017 and commenced operations in Oct 2017. The company has received multiple tranches of capital infusion over the years, with the latest one being in fiscal 2020 wherein ICICI Bank took a 9.9% stake in the company and the remaining share being equally held by Balrampur Chini Mills Ltd and Mr Akash Bhansali (ELME Advisors LLP) .
Auxilo is focussed on educational space in India and caters to the niche segment of funding students who are travelling abroad for studies (higher education loans) and also has a decent share of funding education institutions (education institutions lending).
Past rated pools This is the first securitisation transaction of Auxilo to be rated by CRISIL Ratings.
Key Financial Indicators
* Audited IndAS |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
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. 17.10 crore in the form of scheduled cash flow subordination (assuming 94% monthly principal payout, zero prepayments and no basis risk) – Includes principal subordination of Rs 4.30 crore (6.0% of pool principal) % Linked to RBI repo rate; currently 8.30% coupon |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
Criteria Details
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