Rating Rationale
October 12, 2016 | Mumbai

CRISIL assigns provisional ratings to Series A PTCs issued by Sansar Trust Sep 2016 III
 

Trust Details Structure Yield Terms Rated amount (Rs. Million) Pool Principal (Rs. Million) Tenure (months)# Credit-cum-liquidity enhancement (Rs million)^ Rating/Credit Opinion &
Sansar Trust Sep 2016 III Series A PTCs Par with EIS Fixed 4700.5 4700.5 53 516.2* Provisional CRISIL AAA (SO)@
Second loss facility - 281.1 235.0 Provisional CRISIL BBB+ (SO) Equivalent@

#Indicates door-to-door tenure between issuance date and legal final maturity date. Actual tenure will depend on level of prepayment in pool, exercise of clean-up call option, and extent of shortfall.
^Additionally scheduled excess interest spread (EIS) amounting to Rs.527.2 million (assuming zero prepayments) also provides credit support to PTCs
*Includes a second loss facility of Rs. 281.1 million
&Series A PTC holders are entitled to receive timely interest and timely principal
@A prefix of ‘provisional’ indicates that the rating centrally factors in the strength of specific structures, and will be supported by certain critical documentation by the issuer, without which the rating would either have been different or not assigned ab initio. This is in compliance with a May 6, 2015, Securities and Exchange Board of India (SEBI) directive, “Standardising the term, rating symbol, and manner of disclosure with regard to conditional/ provisional/in-principle ratings assigned by CRAs”.

CRISIL has assigned its ‘Provisional CRISIL AAA (SO)’ rating to the pass-through certificates (PTCs) and credit opinion of ‘Provisional CRISIL BBB+ (SO)’ to the second loss facility issued by Sansar Trust Sep 2016 III. The pool is backed by Used and New Heavy commercial vehicles (HCV), Light commercial vehicles (LCV), Small commercial vehicles, Passenger vehicles (PV), Construction Equipment (CE) and Tractor loan receivables originated by Shriram Transport Finance Company Ltd (STFCL; ‘CRISIL AA+/FAAA/Stable/CRISIL A1+’). The rating on the PTCs is based on the credit quality of pool cash flow, STFCL’s origination and servicing capabilities, the transaction’s credit enhancement and payment mechanism, and soundness of the transaction’s legal structure.

The transaction has a ‘par’ structure. STFCL will assign the pool to Sansar Trust Sep 2016 III, settled by IDBI Trusteeship Services Ltd, which will issue the PTCs to investors. The PTCs are supported by the stipulated cash collateral and excess interest spread. The total credit support available in the transaction is as below:
• Opening overdue of Rs 14.7 million (0.3% of pool cash flows)
• Internal credit support in the form of scheduled EIS, aggregating Rs 535.1 million (9.2% of pool cash flows)
• External credit-cum-liquidity collateral of Rs. 516.2 million (8.9% of pool cash flows) to be provided by STFCL

About the pool
The pool, mainly comprising used CV loans, has a robust seasoning profile (weighted average net seasoning of 11 months). The pool is geographically diverse, with the top three states accounting for 35% of the principal. Moreover, the weighted average loan-to-value ratio is 71.4% and average ticket size is Rs 0.4 million.

This is a ‘provisional’ rating and will be converted into a ‘final’ rating based on receipt of the following documents:
•    Trust deed
•    Power of attorney
•    Information memorandum
•    Assignment agreement
•    Legal opinion
•    Trustee letter
•    Representations and warranties letter


Additional documents, if any, executed for the transaction should also be provided. A rating rationale/report indicating the conversion of the ‘provisional’ rating to ‘final’ post the 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: Revision in CRISIL policy for assigning ‘provisional’ rating.

Rated pools
CRISIL has outstanding credit opinions/ratings on nine transactions originated by STFCL. Performance of all the pools is in line with CRISIL’s expectations.

About the Originator
STFCL, incorporated in 1979, is the flagship company of the Shriram group. The company is registered with the Reserve Bank of India as a deposit-taking, asset-financing non-banking financial company. STFCL provides financing for vehicles such as CVs (both pre-owned and new), tractors, and passenger vehicles. It has pan-India presence, with 853 branches and 803 rural centres as on March 31, 2016.

STFCL’s total income and profit after tax (PAT) were Rs 52.6 billion and Rs 11.8 billion, respectively, for fiscal 2016, against Rs 45.0 billion and Rs 10.3 billion, respectively, for fiscal 2015.


Links to related criteria
CRISILs rating methodology for ABS transactions
Evaluating risks in securitisation transactions - A primer
Legal analysis in structured finance transactions

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