A sign that GST blues are abating, securitisation of non-priority sector loans jumped 7 per cent in the first three quarters of the current fiscal at Rs 59,000 crore, boosted by a full 120 per cent surge in transactions in the December quarter.
This strong growth was driven by demand for non-priority sector lending assets and low-base effect of the third quarter of last fiscal, which was affected by the note-ban, says a report by Crisil.
This is significant as the volume had shrunk 20 per cent in the first half of this fiscal year due to the uncertainty over the applicability of goods and services tax (GST) on securitisation transactions but sprung up once clarity emerged in the third quarter, noted the report.
"A jump in non-PSL loans bolstered the overall securitisation volume by 7 per cent at Rs 59,000 crore. This was possible as there was a massive 120 per cent surge in the third quarter," Crisil said in the report.
During the reporting period, Q3 especially saw demand for retail credit, demand from mutual funds, and yield hunt by corporate treasuries cranking up the demand for non-PSL assets. For large originators, non-PSL asset-backed pass-through certificates (PTCs) fetched 7.5-8 per cent coupons or 100-150 basis points more than for PSL asset-backed instruments, while for smaller originators, PTC yields are upwards of 10 per cent.
"Consequently, non-PSL transactions now contribute to around 45 per cent of the overall market volume, way above the historical 25 per cent and mortgage receivables (home loans of higher ticket sizes do not qualify as PSL) remained the preferred non-PSL asset class," the report said.
The agency estimates mortgage receivables account for 70 per cent of the overall non-PSL volume. Receivables from car and two-wheeler loans, consumer and commercial vehicle loans also drew interest from public sector banks, mutual funds and corporate treasuries.
"The dynamics of the securitisation market are changing and demand for non-PSL assets will be the driver of growth going forward. This is healthy, and we expect the momentum to continue in the fourth quarter. With participation by MFs and corporate treasuries rising, newer asset classes and multi-tranche structures are growing," said the report.
PSL securitisation, which traditionally accounted for around 75 per cent of volume, shrunk to 55 per cent due to increasing preference for priority sector lending certificates, which grew to Rs 1.26 trillion in the first nine months from Rs 49,500 crore for the whole of FY17.
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