Senior PTCs Series A (Payouts
of Rs988.6 million)
PTCs Series P (Payouts of Rs290.9 million)
Series Pass Through Certificates (PTCs) issued by VE Trust 8 (with UTI Bank
Limited as the trustee) have received CRISIL's provisional rating of 'AAA(so)'
(Triple A structured obligation). The rating will become valid 90 days after
the required documentation is submitted to CRISIL. The 'AAA(so)' rating indicates
the highest degree of certainty regarding timely payment of financial obligations
on the instruments. These PTCs are backed by receivables from utility vehicle
and car loan contracts originated by Mahindra and Mahindra Financial Services
Ltd (Mahindra Finance).
is the first instance where put options have been offered to a set of PTC
holders by an independent third party, in a retail asset securitisation transaction.
The Series A PTCs have a series of six-monthly put options provided by IDBI,
which enhances their liquidity and marketability. They also have a floating
rate of interest linked to NSE MIBOR. A 'prepayment absorbing' fixed rate
PTC, Series P, has been designed to absorb the prepayments in the pool. The
structure envisages an embedded interest rate swap for converting fixed rate
cash flows into floating rate cash flows. The floating rate and fixed rate
PTCs are pari-passu, and together comprise the Senior PTCs. Series A PTC holders
derive the triple benefits of prepayment protection, a floating rate of interest
and high levels of liquidity.
ratings assigned to the PTCs are based on:
strength of the cash flows from the pool.
Finance's origination and servicing capabilities.
- The payment
mechanism designed to ensure full and timely payment.
- The credit
enhancement stipulated for the senior PTCs.
- The legal
opinion to be furnished to CRISIL regarding the true sale of
receivables to the trust, and bankruptcy remoteness of receivables from Mahindra
pool consists of 6,464 loan contracts with receivables aggregating to Rs1,418.50
million. The pool is selected from Mahindra Finance's utility vehicle and
car portfolio and consists of current contracts or contracts overdue for less
than one month on the cut-off date. The pool has a favourable seasoning profile
(minimum four months and average 10 months). It is geographically well diversified.
the last two-and-a-half years, CRISIL has rated seven securitisation transactions
originated by Mahindra Finance. Most of the pools have exhibited a fair collection
performance and moderate utilisation of credit enhancements, highlighting
Mahindra Finance's adequate servicing capabilities.
Finance is engaged in retail financing of utility vehicles and tractors manufactured
by Mahindra & Mahindra Ltd (M&M). The company has financed cars since
FY03, by leveraging its 251-branch distribution network. Mahindra Finance
is one of the larger asset financing companies in India with average funds
deployed of Rs18.65 billion as on March 31, 2004. It has outstanding ratings
'FAA+' and 'P1+' on its various debt obligations from CRISIL. The company
reported a net profit (PAT) of Rs676.2 million for FY04 (Rs443.5 million).