Details |
Yield Terms |
Issue Size
(Rs. Million)
|
Tenure (Months)#
|
Rating
|
Credit-cum-Liquidity Enhancement
(Rs. Million)^
|
Series A PTCs |
Fixed |
3,194.5
|
53
|
CRISIL AA+ (SO)
|
296.0
|
#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.727.8 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 September 2014, a trust managed by managed by IDBI Trusteeship Services Ltd. 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. 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 58.6 per cent of the principal. All contracts are current on payments as on the pool cut-off date, with a weighted average loan-to-value ratio of 68.8 per cent and average ticket size of Rs.0.36 million.
Rated Pools
CRISIL has outstanding credit opinion/rating on four transactions originated by MMFSL backed by tractor loan receivables. The performance of all the pools is in line with CRISIL’s expectations.
About the Originator
MMFSL, a non-banking finance company, was incorporated in 1991. The company was founded by its majority shareholder, Mahindra & Mahindra Ltd (M&M; rated ‘CRISIL AAA/Stable/CRISIL A1+’), along with Kotak Mahindra Bank Ltd (KMBL; ‘CRISIL AAA/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 March 31, 2014, M&M held a 51.2 per cent shareholding in MMFSL. CRISIL believes that M&M will continue to hold 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 a consolidated basis, total income and net profit of Rs.53.0 billion and Rs.9.6 billion, respectively, for 2013-14 against total income and net profit of Rs.41.1 billion and Rs.9.3 billion, respectively, for 2012-13.
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