||Rated amount (Rs. Million)
||Pool Principal (Rs. Million)
||Tenure (Months) #
||Credit-cum-Liquidity Enhancement (Rs. Million)^
||Rating/ Credit Opinion
|Sansar Trust December 2015 II
||Series A PTCs
||Par with EIS
||Provisional CRISIL AAA (SO)@
|Second Loss Facility
||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, amounting to around Rs.439.9 million (assuming zero prepayments), provides credit support to PTCs.
* Includes a second loss facility of Rs.345.7 million.
@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 will 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) Equivalent’ to the second loss facility issued by Sansar Trust December 2015 II. The pool is backed by commercial vehicle (CV), tractors, construction equipment, and passenger vehicle loan receivables originated by Shriram Transport Finance Company Ltd (STFCL; rated ‘CRISIL AA+/FAAA/Stable/CRISIL A1+’). The rating on PTCs is based on the credit quality of pool cash flows, STFCL’s origination and servicing capabilities, 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 December 2015 II, settled by IDBI Trusteeship Services Ltd, which will issue PTCs to investors. The PTCs receive support from the stipulated cash collateral and excess interest spread.
About the Pool
The pool mainly consists of used CV and used tractor loans, which have a robust seasoning profile (weighted average net seasoning of 10.3 months). The pool is geographically diverse, with the top three states accounting for 37.1 percent of the principal. Moreover, 97.6 percent of the principal is from contracts that are current on payments as on the pool cut-off date, with a weighted average loan-to-value ratio of 66.6 percent and ticket size of Rs.0.27 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 a 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.
CRISIL has outstanding credit opinions/ratings on 6 transactions originated by STFCL. Performance of all the pools is in line with CRISIL’s expectations.
About the Originator
For 2014-15 (refers to financial year, April 1 to March 31), STFCL reported total income (net of interest expense) and profit after tax (PAT) of Rs.41.8 billion and Rs.12.4 billion, respectively, against Rs.38.1 billion and Rs.12.6 billion, respectively, for 2013-14. For the six months ended September 30, 2015, it reported total income (net of interest expenses) and PAT of Rs.23.8 billion and Rs.6.6 billion, respectively, against Rs.20.1 billion and Rs.6.1 billion, respectively, for the corresponding period of the previous year.
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 predominantly finances CVs (both pre-owned and new) to the small road transport operator segment. It has also started financing purchase of tractors, passenger vehicles, earth-moving equipment, and large agricultural equipment. The company has pan-India presence, with 741 branches and 776 rural centres as on March 31, 2015.
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