Citibank Securitises Alfl Receivables

In a novel move, Citibank has structured and securitised the receivables portfolio of Ashok Leyland Finance Ltd (ALFL) worth Rs 63.35 crore in three separate series of pass-through certificates, each having a different maturity and effective yield.

The securitisation deal involved the use of separate trading of registered interest and principal of securities (STRIPS) technology. This is the first securitisation deal to have been issued directly in the dematerialised form. The use of the STRIPS technology attracted a wider pool of investors as well as ensured efficient pricing.

Citibank stated that the recently concluded issuance closed at the lower end of the book-building band for all the three series of certificates. "The pricing achieved is the lowest for any securitisation transaction," it stated. Incidentally, prices were the lowest today.

 

All the three pass-through certificates, rated AAA (so) by Crisil, were issued by the Peoples Financial Services acting as the special purpose vehicle. The rating is subject to credit enhancement provided by a two-tier structure of subordination and cash collateral.

ALFL has been using securitisation through portfolio sales as a financial engineering tool for balance sheet management.

"This has enabled efficient use of capital while maintaining a compounded annual growth rate of more than 25 per cent over the last four to five years," said the company's managing director S Nagarajan.