Hudco Enters Securitisation Mode

Housing & Urban Development Corporation (Hudco) has announced the launch of its Rs 500-crore loan securitisation programme next month.

The securitisation programme will cover Hudco's loans to urban infrastructure sectors such as water supply, roads, bridges, ports and airports, according to Hudco chairman & managing director V Suresh.

Hudco has decided to offer Rs 500 crore assets for securitisation from its infrastructure portfolio before March 2000, he said at a press conference here yesterday.

A consortium of banks consisting of ABN Amro JM Morgan and Citibank have been selected as advisors for the Rs 500 crore asset-backed securitisation of the public sector infrastructure financial institution Hudco.

 

Citibank has been selected as the lead advisor for the phase-I of the deal while ABN Amro Bank and J M Morgan Stanley is the lead advisor for the second phase to be taken up in the first quarter of financial year 2000-2001.

According to Suresh, the receivables pool would consist of revenue streams from water, road projects, municipalities and urban development projects in the states. He has indicated that no cherry picking of assets would be permitted for subscribers. The entire pool is expected to have a seasoning of at least 3 years.

Based on the success of the first round of placements, Hudco is expected to carry out the second tranche. The rating teams from both Crisil and ICRA have been mandated to choose the pool of receivables. Based on these pools of receivables, Hudco is expected to make the placements.

Hudco has also indicated that over collateralisation, providing additional cash flow streams as part of the safety net for the paper, was possible in order to obtain the best possible ratings for the paper. This is in order to target Provident Funds in the country, where a dual rating falling in top investment grade bracket was essential.

The pass through certificates have a fixed interest rate in the region of 11.5 to 12.5 per cent, and a tenure of seven years, according to Suresh.