Detailed Rationale CRISIL Ratings has converted its provisional ratings assigned to Pass Through Certificates (PTCs) issued by ‘Sun CV Trust Dec 2023’ to final ratings of 'CRISIL AAA (SO)' under a securitisation transaction originated by IndoStar Capital Finance Limited (IndoStar; rated ‘CRISIL AA-/Negative/CRISIL A1+’).
This securitisation transaction is backed by receivables from vehicle loans originated by IndoStar. The rating is based on the credit support available to the PTCs, credit quality of underlying receivables, IndoStar’s origination and servicing capabilities, the payment mechanism, and soundness of the transaction’s legal structure.
CRISIL Ratings has now received the final legal/executed documents for this transaction. These executed documents are in line with terms of the transaction envisaged when provisional rating was assigned. Hence, CRISIL Ratings has converted the provisional ratings to final ratings.
Executed documents:
Other Documents:
The transaction has a ‘Par with turbo amortisation’ structure. IndoStar has assigned the pool to ‘Sun CV Trust Dec 2023’, a trust settled by Catalyst Trusteeship Limited (CTL), which will in turn has issued Series A1 PTCs to investors in exchange for a purchase consideration amounting to 95.0% of the initial pool principal. IndoStar will continue to service the underlying loan pool.
Series A1 PTCs are promised monthly interest payments on a timely 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 A1 PTCs on a monthly basis.
The credit enhancements available in the transaction to support PTC payouts are described below:
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Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
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Liquidity: Strong The cash collateral available in the transaction is INR 20.40 crore which is in the form of fixed deposits. Liquidity is strong given that the credit enhancement (internal and external combined) in the structure is sufficient to cover losses exceeding 2.5 times the currently estimated base shortfalls.
CRISIL Ratings has adequately factored these aspects into its rating analysis. |
Rating Sensitivity factors Upward: None
Downward
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About the Pool 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 10.5 months (measured from the first instalment date to cut-off date) and a weighted average tenure of 41.7 months (measured from disbursment date to the last EMI date). The pool loans had an average disbursement amount of INR 6.6 lakh, with a weighted average IRR of 18.0% and a weighted average LTV of 68.9%. Loans originated in the top 3 states (Tamil Nadu, West Begal, Jharkhand) accounted for 39.0% of the initial pool principal. The proportion of used vehicle loans was 96.0%. As of the cut-off date (Novmeber 30, 2023), all loans were current on repayment, and had shown zero instances of delinquency since disbursement.
Counterparty Details
About the Originator IndoStar, 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 an initial capital of around Rs 900 crore. In May 2020, Brookfield invested Rs 1,225 crore and became the largest shareholder and co-promoter. As on date, Brookfield holds 56.20% stake, followed by the Everstone group) at 18.8%. Everstone Group have completed the sale of 14.21% of the total paid-up equity share capital of the Company through an Offer for Sale, to comply with the minimum public shareholding requirements as per SEBI. Pursuant to the same, Everstone Group’s holding stands at 18.8% and public shareholding in the company increased to 25% w.e.f. 05th May 2023. IndoStar started business as a wholesale financier in fiscal 2011 and entered the SME finance (loans against property) segment in fiscal 2015. In fiscal 2018, the company started offering vehicle finance and housing finance (through wholly owned subsidiary, IndoStar Home Finance Pvt Ltd). In fiscal 2019, IndoStar acquired the CV finance business of IIFL Finance Ltd. The company plans to focus on used CV financing and affordable housing finance hereon |
Key Financial Indicators
Past rated pools This is the sixth securitisation transaction backed by IndoStar-originated loan receivables to be rated by CRISIL Ratings. CRISIL Ratings receives monthly servicer and payout reports from the Trustee for transactions where ratings are outstanding. |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
#Indicates legal final maturity date for the instruments. Actual maturity 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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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
Criteria Details
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