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| Fitch Assigns Final Rating to STFCL - DA Program - March 09 - 3 |
| Announcement / Banking Aug 03, 2009, 20:17 IST |
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Fitch Ratings has assigned a final rating of 'AAA(ind)(SO)' with a Stable Outlook to the purchaser payouts in a direct assignment (DA) transaction. The New and Used Commercial Vehicle (CV) loan pool assigned to the purchaser is originated by Shriram Transport Finance Co. Ltd. (STFCL, the "originator" or "seller", 'AA(ind)'/Stable).
The final rating addresses the timely payment of interest and principal to the purchaser by the scheduled maturity date of March 2014, in accordance with the transaction documentation. The final rating is based on the origination, servicing, collection and recovery expertise of STFCL, the legal and financial structure of the transaction and the credit enhancement and liquidity facility provided by the originator.
The loans that were assigned to the purchaser have an aggregate outstanding principal balance of INR1,318.4m and future receivables of INR1,783.4m as of the cut-off date of 31 March 2009. In this premium transaction, the credit enhancement for the pool is in the form of a fixed deposit provided by the originator equal to 24.4% of future receivables as of the cut-off date. There is also a liquidity facility of 2.7% of the future receivables.
As part of its analysis, Fitch built a pool cash flow model based on the financial structure of the transaction. The agency also analysed historical data to determine the base values of key variables that would influence the level of expected losses in this transaction. The base values of the default rate, recovery rate, time to recovery, collection efficiency, prepayment rate and pool yield were stressed to assess whether the level of credit enhancement was sufficient for a 'AAA(ind)(SO)' rating.
A new issue report for this transaction will be available shortly on Fitch's website, www.fitchindia.com.
Rating Outlooks have been published for all newly issued Asia Pacific Structured Finance tranches since June 2008, and concurrently with rating actions for tranches issued prior to June 2008. Unlike a Rating Watch which notifies investors that there is a reasonable probability of a rating change in the short term as a result of a specific event, rating Outlooks indicate the likely direction of any rating change over a one- to two-year period.
Note to editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(ind)' for National ratings in India. Specific letter grades are not therefore internationally comparable.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Fitch Ratings currently maintains coverage of approximately 6,000 financial institutions, including over 3,200 banks and 2,200 insurance companies. Finance & leasing companies, broker-dealers, asset managers, managed funds, and covered bonds make up the remainder of Fitch Ratings’ financial institution coverage universe.
Fitch India has Five rating offices located at Mumbai, Delhi, Chennai, Kolkata and Bangalore. Fitch is recognised by Reserve Bank of India, Securities Exchange Board of India (SEBI) and National Housing Bank.
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