Rickles MFI 2023 (Originator: Satin Creditcare Network Limited) 'Provisional CRISIL AA (SO)' assigned to Series A1 PTCs
Rating Action
^Additional credit support includes Rs 28.58 crore in the form of scheduled cashflow subordination for Series A1 PTCs – including Rs 13.64 crore of principal overcollateralization. @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' and April 27, 2021 circular ‘Standardizing and Strengthening Policies on Provisional Rating by Credit Rating Agencies (CRAs) for Debt Instruments’ issued by Securities and Exchange Board of India (SEBI).
Detailed Rationale CRISIL Ratings has assigned its ‘Provisional CRISIL AA (SO)’ rating to Series A1 pass-through certificates (PTCs), issued by ‘Rickles MFI 2023’ under a securitisation transaction originated by Satin Creditcare Network Limited (SCNL; Not rated by CRISIL).
This transaction is backed by a pool comprising microfinance loan receivables originated by SCNL. The ratings are based on credit quality of the pool cash flow, origination, and servicing capabilities of SCNL, credit support available to the PTCs, payment mechanism for the transaction, and soundness of the transaction’s legal structure.
The transaction has a ‘par’ structure with turbo amortisation wherein the seller will assign the loan receivables to ‘Rickles MFI 2023’ in exchange for a purchase consideration, which is equal to 88.0% of the pool principal. The trust will issue Series A1 PTCs for the 88.0% and 12.0% of the initial pool principal will act as overcollateralization. Series A1 PTCs are entitled to receive timely interest on a monthly basis and principal on ultimate basis. Catalyst Trusteeship Limited will be appointed as trustee to monitor the transaction on behalf of the PTC investors. SCNL will continue to service the pool contracts as the servicing agent.
The credit collateral amounting to 7.05% of pool principal along with scheduled cashflow subordination (assuming zero prepayments) amounting to 25.1% of pool principal provides cover over the expected peak collection shortfalls in the pool that is commensurate with the rating assigned to Series A1 PTCs. |
Key Rating Drivers & Detailed Description Strengths:
Weakness:
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Rating Sensitivity Factors
Downward factor:
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About the Pool The transaction is backed by microfinance loan receivables originated by SCNL. The contracts in the pool have weighted average seasoning of 6.9 months, consequently, the pool is amortised by 23.8% as of the cut-off date. The pool is mildly concentrated in terms of geography with the top 3 state and top 3 districts accounting for 70.1% and 7.9% of pool principal respectively. The average ticket size for contracts in the pool is Rs 41,525, with a weighted average interest rate of 24.5%. All the contracts in the underlying loan pool are current as of the cut-off date (December 01, 2023).
CRISIL Ratings has adequately factored all these aspects in its rating analysis.
Counterparty Details
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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 Satin Network Limited (SCNL or Satin) is a leading microfinance institution (MFI) in the country with presence in 23 states & union territory and around 95,000 villages. The company’s mission is to be one stop solution for excluded households at the bottom of the pyramid for all their financial requirements. The company also offers a bouquet of financial products in the Non‐MFI segment (comprising of loans to MSMEs), a housing finance subsidiary, and business correspondent services and similar services to other financial Institutions through Taraashna Financial Services Limited (TFSL), a business correspondent company and a 100% subsidiary of SCNL.
Key Financial Indicators
*annualised |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
&Yet to be issued ^Additional credit support includes Rs 28.58 crore in the form of scheduled cashflow subordination for Series A1 PTCs – including Rs 13.64 crore of principal overcollateralization. |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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Criteria Details
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