Bankam In 1st Securitisation Deal

The Bank of America (BankAm) has struck its first-ever securitisation deal in India with the city-based Ashok Leyland Finance Ltd (ALF).

The deal involving auto-loan receivables valued at about Rs 50 crore was signed in July. The securitised assets were rated `AAA SO' by Crisil, ALF's vice-president (finance), N Sampath Kumar, told Business Standard.

"Fifty per cent of the credit-cum-liquidity support for the assets securitised will be through bank deposits. The balance will, for the first time, be held in the form of UTI US 64 units," he said.

The deal was struck with a special `buy-back' provision under which ALF will buy back assets for which the repayments are delayed beyond a pre-specified period. This clause has reduced the risk of default for BankAm.

 

BankAm is a large player in the international securitisation market and it has only now developed an appetite for assets in the country. The bank is expected to complete another such deal with ALF in the next two months.

ABN Amro is also talking to ALF for a Rs 30-crore securitisation deal expected to be concluded by mid-September.

If the deal clicks, it will be the first such transaction for ABN Amro as well. "In India sales of cars, heavy, medium and light commercial vehicles and construction equipment exceed Rs 20,000 crore and most of these are financed. There is potential for atleast one-fourth of this to be securitised,'' Sampath Kumar said.

ALF has already completed securitisation deals worth about Rs 850 crore in 18 tranches between June 1995 and June 1998. Of this, deals worth Rs 475 crore were completed during the last financial year (June 97-July 98).

"We already have an in-principle approval for the securitisation of assets worth another Rs 600 crore this year from ICICI, Citibank, GE Caps etc," Sampath Kumar said.