Liquid Gold Series 12 (Originator: IIFL Finance Limited) 'Provisional Crisil AA+ (SO) ' assigned to Series A PTCs
Rating Action:
1 crore = 10 million *The transaction has a replenishment structure with a replenishment period of 6 months followed by an amortisation period with an additional tail period of 5 months. Indicates door to door tenure. Actual tenure will depend on the level of prepayments in the pool, occurrence of triggers during replenishment and amortisation period, and exercise of the clean-up call option @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 A PTCs, issued by ‘Liquid Gold Series 12’ under a securitisation transaction originated by IIFL Finance Limited (IIFL Finance: rated ‘Crisil AA/Crisil AA-/Crisil PPMLD AA/Stable/Crisil A1+’). The pool is backed by gold loan receivables originated by IIFL Finance. The rating is based on the credit support available to the PTCs, the credit quality of the underlying pool receivables, eligibility criteria for additional receivables, trigger events, IIFL Finance’s origination and servicing capabilities, and soundness of the transaction’s legal structure.
Payment structure: The transaction has a ‘par with turbo amortisation’ structure. The trust settled by the transaction’s trustee will issue Series A PTCs in exchange of a purchase consideration equal to 87.9% of the pool principal & Equity tranche(unrated) equal to 4.0% of the pool principal at the time of securitization and remaining 8.1% of the initial pool principal is overcollaterlisation.
The PTCs are issued under a replenishment structure with a door-to-door tenure of 30 months, i.e final legal maturity of PTC is December 2027. Of this, the first 6 months serve as the replenishment period followed by the amortisaton period and tail period. Maximum maturity of the loans that can be added in replenishing period is till June 2027 (payout July 2027), hence there is 5 month tail period post maturity of the underlying loans.
During the replenishment period (till December 2025), there are no interest and principal payouts expected to Series A PTCs. Cashflow available will be utilised to purchase additional loans, that meet pre-defined eligibility criteria, such that the outstanding pool principal of eligible loans plus cash lying in Collection and Payout(C&P) account is at least 1.10 times the initial pool principal plus accrued interest. Cover falling below 1.10 times of the PTC principal and accrued interest will be a trigger event. Scheduled payout to investor will start from January 2026. In case of a replenishment termination event (defined at the time of issuance of PTCs), the replenishment period shall end immediately, and amortisation period will come in effect.
During the amortisation period, interest payments and principal payments to Series A PTC investors are expected on monthly basis and are promised only on an ultimate basis by the instrument’s final maturity date i.e. the transaction has an Ultimate Interest and Ultimate Principal (UIUP) structure based on the amortisation schedule of the final crystallised pool, additionally there is a provision for turbo amortisation during this period. At the legal final maturity date , any shortfall would be paid using available cash collateral. Additionally, excess interest spread (EIS), if any, will be used to pre-pay PTCs holders as per the structure.
Adequacy of credit enhancement The investor payouts for PTCs are supported by cash collateral, subordination of overcollateral principal, Equity tranche (unrated) and subordination of excess interest spread (EIS). On the Series A PTC final maturity date, the cash collateral can be used to make the promised interest and principal repayment in case of a shortfall in collections from the pool.
Credit enhancement available in the transaction structure for Series A PTC is as below:
Based on Crisil Ratings assessment, the total credit enhancement available in the transaction (internal – in the form of EIS, Equity tranche and overcollateralisation; and external – in the form of cash collateral) provide loss absorption against stressed shortfalls in the pool, commensurate with the rating assigned to the PTCs. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
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Liquidity: Strong for Series A PTCs Liquidity is strong given that the credit enhancement available in the structure is sufficient to cover losses exceeding 1.5 times the base case shortfalls in the pool.
Crisil Ratings has adequately factored these aspects into its rating analysis. |
Rating Sensitivity factors Upward factors
Downward factors
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Quality of the asset pool and strength of cashflows The transaction is backed by receivables from a pool of gold loans originated by IIFL Finance. The pool’s key characteristics as of the cut-off date (June 26, 2025) are outlined below: Pool loans have seen a weighted average holding period (number of months from CERSAI date) of 3.7 months prior to securitisation, during which the total disbursed amount for pool loans has amortised by 8.8%. The average disbursement amount for pool loans was Rs 44,368 and weighted average IRR is 19.3% and a weighted average original tenure of 24 months. None of the pool loans had any overdues as of the cut-off date.
Assuming no prepayments, cashflow schedule results in subordination in the form of EIS amounting to Rs 79.94 crore (35.5% of pool principal securitised), scheduled principal subordination in the form of overcollateral amounts to INR 18.19 crore (8.1% of the pool principal securitised & Equity tranche of INR 9.00 crore (4.0% of the pool principal securitised). The portfolio performance of IIFL Finance has been highlighted in the Rating assumptions section below. Based on Crisil Ratings assessment, the total credit enhancement available in the transaction (internal – in the form of EIS and principal subordination; and external – in the form of cash collateral) provide loss absorption against stressed shortfalls in the pool, commensurate with the rating assigned to the PTCs. Crisil Ratings has run sensitivities on the quantum and timing of recovery and has adequately factored the same in its analysis
Key Eligibility criteria for loan assets in the pool (including new loans added during replenishment period): During the Replenishment Period, all collections from pool shall be used by the Trust to purchase additional receivables from Originator, such that the outstanding pool principal of eligible loans plus cash lying in C&P account is at least 1.10 times the initial pool principal plus accrued interest. These additional receivables shall meet the same Eligibility Criteria as applicable for the receivables that were part of the underlying pool at initiation of the transaction. Additional criteria for the replenished pool shall be:
Trigger events for termination of replenishment period:
Additional disclosures for Provisional ratings:
Executed documents:
Other documents:
Additional documents, if any, executed for the transaction should also be provided along with the above 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 deviate significantly from the expectations, Crisil Ratings may take appropriate action including placing the rating on watch or a rating change, depending on status of progress on a case-to-case basis. In the absence of the pending documentation, the rating on the instrument would not have been assigned ab initio.
About the company- Originator/Servicer profile IIFL Finance is the listed holding company of the IIFL Finance group and is registered as a systemically important non-deposit-taking, non-banking financial company. The group offers various retail lending products, including gold loans, home loans, LAP, digital loans and microfinance loans, which are the core segments and form 98% of the AUM. Capital market-based lending (margin funding and loans against shares) and construction and developer finance form the balance of the AUM.
Key Financial Indicators: IIFL Finance (consolidated; Crisil Ratings-adjusted numbers)
Key financial indicators: IIFL Finance (standalone; Crisil Ratings-adjusted numbers)
Quality and experience of servicer: IIFL Finance will continue to service loans assigned to this trust. IIFL Finance 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 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
A summary of key terms of servicer contract
As per indicative transaction terms, the key points on the role of the servicer to be covered as part of the transaction documents are as below:
The servicer shall receive servicing fees which shall be paid by the trustee in accordance with the Waterfall Mechanism as per the transaction documents.
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 Crisil Ratings has 3 ratings outstanding on instruments issued under securitisation transactions backed IIFL Finance -originated loans.
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
1 crore = 10 million ^ ISIN yet to be issued * Coupon rate in p.a.p.m is 8.65% # The transaction has a replenishment structure with a replenishment period of 6 months followed by an amortisation period with an additional tail period of 5 months. Actual tenure will depend on the level of prepayments in the pool, occurrence of triggers during replenishment and amortisation period, 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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