Detailed Rationale Crisil Ratings has reaffirmed its rating on Security Notes (SNs) issued by ‘Solitaire CV Trust Dec 2023’ at ‘Crisil AAA (SO)’. The transaction is backed by vehicle loan receivables originated Indostar Capital Finance Limited (Indostar; rated ‘Crisil AA-/Stable/Crisil A1+’).
The reaffirmation follows the build-up of credit cover available to SNs holders on account of amortisation and healthy pool performance. The rating is based on the credit support available to the SNs, credit quality of underlying receivables, IndoStar’s origination and servicing capabilities, the payment mechanism, and soundness of the transaction’s legal structure.
Payment structure: The transaction has a 'Par with turbo amortisation' structure. Investors are promised timely interest payments on a monthly basis. Principal repayment, while expected on a monthly basis, is promised only on an ultimate basis by the instrument’s legal final maturity. The residual cashflows shall be utilised to make additional principal repayment to Series A SNs on a monthly basis.
Adequacy of credit enhancement: The interest payouts to Series A Security Notes holders are scheduled and promised on a monthly basis, whereas principal payouts are scheduled on a monthly basis however promised on final maturity date. The cash collateral would be used to meet shortfalls in monthly promised payouts as set out in the waterfall mechanism.
Credit enhancement available in the transaction structure to support promised SNs payouts is as below:
Based on Crisil Ratings assessment, the total credit enhancement available in the transaction (internal – in the form of EIS and principal overcollateralization; and external – in the form of cash collateral) provide loss absorption against stressed shortfalls in the pool, commensurate with the ratings
On February 25, 2025, Crisil Ratings had reaffirmed ratings on Series A Security Note. The transaction was eligible for a credit collateral reset; however, the investor consent (required under RBI regulations) was awaited.
Indostar has received the investor’s consent for the reset of credit collateral. Following the reset, the revised total cash collateral stands at Rs. 24.19 crore (53.4% of future PTC payouts after May 2025 payouts). Given the pool performance and high amortisation of around 75.1%, even after the reset the credit cover available to the PTCs remains commensurate with the outstanding ratings of the instruments.
The pool has exhibited good collection performance as seen by strong collections ratios. As after May-2025 payouts, the cumulative collection ratio (CCR)[1] for the pool is robust at 97.4%. This has led to minimal delinquencies in the pool as reflected in 0+ overdue of 1.9% of initial pool principal. The healthy collection performance coupled with pool amortisation (% of initial principal securitised) of 75.1% has led to an increase in the credit cover available to future SNs payouts from the cash collateral [1] CCR = {Total collections in the pool/(Total billings + opening overdues at the time of securitisation)} |
Key Rating Drivers & Detailed Description Strengths:
Weakness:
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Liquidity: Strong Liquidity position is strong given that the credit enhancement (internal and external combined) in the structure is above 1.5 times the estimated base shortfalls on the residual pool cash flows. |
Rating Sensitivity factors Upward factors
Downward Factors
Quality of the asset pool and strength of cashflows: The securitisation transaction is backed by a pool of used and new vehicle loan receivables originated by IndoStar. As of the pool cut-off date, pool loans had a weighted average seasoning of 13.8 months (measured from the first instalment date to cut-off date) and a weighted average original tenure of 40.5 months. The pool loans had an average disbursement amount of INR 5.6 lakh, with a weighted average IRR of 18.4% and a weighted average LTV of 71.7%. Loans originated in the top 3 states (Tamil Nadu, West Begal, Gujarat) accounted for 49.9% of the initial pool principal. As of the cut-off date (Novmeber 30, 2023), all pool loans were current on repayment and had not displayed any instances of delinquency since disbursement.
Pool Performance Summary (as after May 2025 payouts)
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About the company - Originator/Servicer profile IndoStar Capital, incorporated in July 2009, is registered with the Reserve Bank of India as a systemically important, non-deposit taking, non-banking financial company. The company was founded and incorporated by private equity players (Everstone, Goldman Sachs, Baer Capital Partners, ACPI Investment managers, and CDIB International) with initial capital of around Rs 900 crore. In May 2020, Brookfield invested Rs 1,225 crore and became the largest shareholder and promoter. Brookfield holds 56.20% stake in the company, followed by the Everstone group at 17.4%.
The company started the business as a wholesale financier in fiscal 2011 and entered the SME finance (loans against property) segment in fiscal 2015. In fiscal 2018, it started offering vehicle finance and housing finance (through wholly owned subsidiary, IndoStar Home Finance Pvt Ltd). In fiscal 2019, IndoStar Capital acquired the CV finance business of IIFL Finance Ltd. The company plans to focus on used CV financing and affordable housing finance.
Key Financial Indicators
Quality and experience of servicer: IndoStar Capital; ‘Crisil AA-/Stable/Crisil A1+’ will continue to service loans assigned to this trust. Indostar has originated several securitisation transactions in past. Servicing has been done, and reports have been shared across all these transactions in a timely manner
Risks and concerns for investors and mitigating factors: The total credit enhancement available in the transaction (internal in the form of EIS and junior tranche; and external in the form of cash collateral) together can mitigate against shortfalls in collection from the pool even after stressing them commensurate with the rating assigned to the PTCs. Crisil Ratings has adequately factored key risks in the transaction including Credit & Market (as highlighted in rating assumptions section), Counterparty and Legal risks. Legal risks are assessed based on detailed analysis of transaction documentation. Risk factored from counterparties are mentioned in the table below:
Counterparty Details
Summary of key terms of servicer contract The key points on the role of the servicer covered as part of the transaction documents are as below:
Provision for appointment of back-up servicer: The Trustee (acting on the instructions of the investors) as per the terms of the Servicer Agreement and upon the occurrence of Servicer’s Event of default, shall retain the right to appoint an alternate service. Crisil ratings has ratings outstanding on instruments issued under 8 securitisation transactions backed by IndoStar-originated loans. Crisil ratings receives monthly performance reports pertaining to these transactions. |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Indicates legal final maturity date for the instrument. Actual maturity date will depend on the level of collection shortfalls in the pool, the level of prepayments in the pool, and exercise of the clean-up call option. |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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