Details |
Yield Terms |
Issue Size
(Rs. Million)
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Tenure#
(Months)
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Rating
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Credit-cum-Liquidity Enhancement
^
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Series A PTCs
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Fixed
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1965.2 |
52 |
CRISIL AA+ (SO) |
186.0
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#Actual tenure will depend on the level of prepayments in the pool and the exercise of clean-up call option
^Additionally, scheduled excess interest spread, amounting to around Rs.362.3 million (assuming zero prepayments), provides credit support to the PTCs
CRISIL has assigned its ‘CRISIL AA+ (SO)’ rating to the pass-through certificates (PTCs) issued by MM Trust March 14 III. The PTCs are backed by tractor loan receivables originated by Mahindra & Mahindra Financial Services Ltd (MMFSL; rated ‘CRISIL AA+/FAAA/Stable/CRISIL A1+’). The rating is based on the credit quality of the pool cash flows, MMFSL’s origination and servicing capabilities, the transaction’s credit enhancement and payment mechanism, and the soundness of the transaction’s legal structure.
The receivables arise from a pool of loans for tractors originated by MMFSL. The transaction has a ‘par’ structure. MMFSL will assign the pool to MM TRUST MARCH 14 III, managed by IDBI Trusteeship Services Ltd, which in turn will issue PTCs to investors. The PTCs receive support from the stipulated cash collateral and the excess interest spread.
About the Pool
The pool consists of tractor loans, which are geographically diversified, with the top three states in the pool together accounting for 49.5 per cent of the principal. Contracts which are current on payments as on the pool cut-off date constituted 95.7 per cent of the pool principal, with a weighted average loan-to-value ratio of 63.9 per cent and average ticket size of Rs.0.33 million.
Rated pools
CRISIL has outstanding credit opinion/rating on two transactions originated by MMFSL backed by tractor loan receivables. The performance of both the pools is in line with CRISIL’s expectations.
About the Originator
MMFSL, a non-banking finance company (NBFC), was incorporated in 1991. The company was founded by its majority shareholder, Mahindra & Mahindra Ltd (M&M; rated ‘CRISIL AA+/Stable/CRISIL A1+’), along with Kotak Mahindra Bank Ltd (KMBL; rated ‘CRISIL AA+/FAAA/Stable/CRISIL A1+’), as a strategic investor. In 1998, M&M bought out KMBL’s stake in MMFSL, making it a wholly-owned subsidiary. As on September 30, 2013, M&M held a 51.2 per cent shareholding in MMFSL. CRISIL believes that M&M will retain its majority stake in MMFSL over the medium term.
MMFSL finances consumer purchases of UVs, LCVs, tractors, cars, and other assets. To leverage its extensive branch network and rural clientele, the company has entered into the rural housing finance segment through its subsidiary, Mahindra Rural Housing Finance Ltd. Mahindra Insurance Brokers Ltd, MMFSL’s insurance broking arm, provides insurance broking services in the life and non-life insurance segments.
MMFSL reported, on consolidated basis, a total income and a net profit of Rs.38.2 billion and Rs.6.2 billion, respectively, for the nine months ended December 31, 2013 against a total income and a net profit of Rs.29.2 billion and Rs.5.8 billion, respectively, for the corresponding period of 2012-13 (refers to financial year, April 1 to March 31). The company had reported, on a consolidated basis, a total income and a net profit of Rs.41.1 billion and Rs.9.3 billion, respectively, for 2012-13, vis-à-vis a total income and a net profit of Rs.29.1 billion and Rs.6.4 billion, respectively, for 2011-12.
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