Rating Rationale
February 02, 2017 | Mumbai
Sansar Trust September 2016
(Originator: Shriram Transport Finance Company Limited)
'CRISIL AAA (SO)/CRISIL BBB+ (SO) Equivalent' Converted from Provisional Rating to Final Rating for Series A1, Series A2 PTCs  and Second loss facility
 
Rating Action
Transaction Details Amount Rated
(Rs Crore)
Outstanding Amount
(Rs Crore)
Original Tenure (Months)# Balance Tenure (Months)# Credit Collateral(Rs Crore)^ Ratings/ Credit Opinion& Rating Action
Sansar Trust September 2016 Series A1 PTCs 198.77 274.95$ 13 9 38.26* CRISIL AAA (SO) Converted from Provisional Rating to Final Rating
Series A2 PTCs 148.47 51 47
Second loss facility 20.89 51 47 17.36 CRISIL BBB+ (SO) Equivalent
Refer to annexure for Details of Instruments & Bank Facilities
#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.
&Series A1 PTC holders are entitled to receive timely interest and timely principal and Series A2 PTC holders are entitled to receive timely interest on a monthly basis. Series A2 PTC holders are entitled to receive timely principal once Series A1 PTC holders are paid out in full.
^Additionally scheduled excess interest spread (EIS) amounting to Rs.48.40 crore (assuming zero prepayments) also provides credit support to PTCs
*Includes a second loss facility of 20.89 crore
$Data as of January 2017 payouts
Detailed Rationale

CRISIL has converted the provisional ratings assigned to Series A1 PTCs, Series A2 PTCs and Second Loss Facility to final ratings of 'CRISIL AAA (SO)' to the PTCs and 'CRISIL BBB+ (SO) Equivalent' to Second Loss Facility. CRISIL had earlier assigned its 'Provisional CRISIL AAA (SO)' rating to Series A1 pass-through certificates (PTCs) and Series A2 PTCs, and 'Provisional CRISIL BBB+ (SO) Equivalent' rating to the second loss facility, issued by Sansar Trust September 2016, a trust settled by IDBI Trusteeship Services Ltd. The pool is backed by used and new commercial vehicles (CV), passenger vehicles (PV), three wheeler (3W) and construction equipment (CE) loan receivables originated by Shriram Transport Finance Company Ltd (STFCL; 'CRISIL AA+/FAAA/Stable/CRISIL A1+'). CRISIL has received the final legal documents executed for the transaction. The executed documents are in line with the transaction terms at the time of provisional rating. Hence, CRISIL has converted the provisional rating to final rating.
 
Please click on the link below for detailed information on CRISIL's policy on provisional rating: Revision in CRISIL policy for assigning 'provisional' ratings
 
As required, CRISIL has received the following final legal documents:

  • Trust Deed
  • Assignment Agreement
  • First Loss Credit Facility Agreement
  • Second Loss Credit Facility Agreement
  • Power of Attorney
  • Collection & Servicing Agency Agreement
  • Auditor's Certificate
  • Legal Opinion
  • Reps & Warranties from the Seller/Originator
  • Letter from Trustee

Key Rating Drivers and Description:
 
Supporting Factors

  • Credit Support available in the structure: Credit collateral of Rs 38.26 crore (8.9% of the pool cash flows) provide credit support to the PTCs. The PTCs also benefit from scheduled EIS and opening overdue subordination aggregating Rs 48.40 crore and Rs. 0.7 crore respectively (11.3% and 0.2% of pool cash flows, respectively)

Constraining Factors

  • High proportion of adverse IRR contracts: 72% of the original principal emanates from contracts with IRR greater than 20% which have exhibited higher delinquencies at a portfolio level.

CRISIL has adequately factored these aspects in its rating analysis
 
About the Pool
The pool consists mainly of CV (78%) contracts, as well as PV (12%), 3W (8%) and CE (2%). At the time of securitisation, the pool had a weighted average net seasoning of 10.8 months, and weighted average original tenure of 37 months. Average ticket size of the pool was Rs 2 lakhs and weighted average loan-to-value ratio was moderate at around 68%
 
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 5260 crore and Rs 1180 crore, respectively, for fiscal 2016, against Rs 4500 crore and Rs 1030 crore, respectively, for fiscal 2015.
 
Past Rated Pools
CRISIL has outstanding credit opinions/ratings on 12 transactions originated by STFCL. CRISIL is receiving monthly performance reports pertaining to this transaction. The performance of the transactions has been in line with CRISIL's expectations.

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.
Annexure - Details of Instrument(s)
Type of Instrument Rated Amount (Rs Crore) Date of Allotment  
 
Maturity date*
Coupon Rate (%) (Annualised) Outstanding
Rating&
Credit cum liquidity Enhancement$ (Rs Crore)
Series A1 PTCs 198.77 23-Sep-16 20-Oct-17 8.75 CRISIL AAA (SO) 38.26^
Series A2 PTCs 148.47 18-Dec-20 CRISIL AAA (SO)
Second Loss Facility 20.89 18-Dec-20 - CRISIL BBB+ (SO) Equivalent 17.36
1 crore = 10 million
*Indicative maturity date
& Series A1 PTC holders are entitled to receive timely interest and timely principal and Series A2 PTC holders are entitled to receive timely interest on a monthly basis. Series A2 PTC holders are entitled to receive timely principal once Series A1 PTC holders are paid out in full.
$Additionally scheduled excess interest spread (EIS) amounting to Rs.48.40 crore (assuming zero prepayments) also provides credit support to PTCs
^Includes a second loss facility of 20.89 crore
Annexure - Rating History for last 3 Years
  Current 2017 (History) 2016  2015  2014   
Instrument Type Quantum Rating Date Rating Date Rating Date Rating Date Rating Beginning
Series A1 PTCs LT  198.77 CRISIL AAA (SO)   No Rating Change   23-09-16   Provisional CRISIL AAA (SO)       -- --
Series A2 PTCs LT  148.47 CRISIL AAA (SO)   No Rating Change   23-09-16  Provisional CRISIL AAA (SO)       -- --
Second loss facility LT  20.89 CRISIL BBB+ (SO)   No Rating Change   23-09-16  Provisional CRISIL BBB+ (SO)       -- --
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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