LIC turns to securitised papers
Bangalore: Life Insurance Corporation of India (LIC) has begun picking up mortgage-backed securitised (MBS) papers in a bid to push up the average yield on investments in its portfolio. Sources said here that LIC had picked up at least Rs 160 crore in a single transaction with its housing finance subsidiary, LIC Housing Finance Ltd (LICHFL). S.C. Jain, chief executive of the LICHFL, confirmed the deal and added that more securtisations would be attempted during the coming months. The objective of this securitisation would be to reduce the dependence on borrowed resources for meeting its working fund requirements. During the last financial year alone, LICHFL had placed about Rs 430 crore worth of securitised papers. The takers for this paper included LIC along with some public sector banks. During the last financial year, however, the discounting for these papers was in the region of 10 and 8 per cent. Insurance companies, including LIC, have begun seriously picking up securitised instruments in view of the high interest offered.
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No special treatment for smaller banks
New Delhi: The ministry of finance has decided on a level playing field for all banks in the government securities buyback exercise with no special treatment to be set aside for the smaller entities among the pack of public sector banks. Some of the smaller public sector banks had sought the Government's help in keeping them in a separate section in the auction process since they felt that they would not be able to bid competitively against the larger banks. It had been pointed out that the larger banks with much larger portfolio of government securities would be able to outbid the smaller banks since the latter would not afford to offer discounts that the larger banks might be willing to offer. However, after debating over the issue, the Government has now decided that there would be no separate treatment to any segment of the PSU banks. "Everyone would have to play by the same rules during the auction. There would be no special treatment of any banks," senior finance ministry officials said.
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IFC Ooays $20 mn loan for Alok Inds
Mumbai: The International Finance Corporation (IFC Washington) has approved a loan of $20 million to Alok Industries, a Mumbai-based textile company. This loan will be disbursed through a consortium of banks, of which the lead bank is the State Bank of India (SBI), sources said. The approved loan is part of a large-scale $86.9 million project that Alok Industries is undertaking. The project will aim to strengthen Alok’s position as a cost competitive one-stop sourcing center for the Indian garment export sector. It will also allow the company to increase its direct exports. The specific components of the $86.9 million project includes the following: capital expenditure and incremental working capital ($66.2 million). With this, Alok Industries is investing $49.8 million in order to set up of a dye-print-finish unit, establishing a small made-ups unit, expanding its weaving capacity, expanding its texturising capacity and expanding its knit processing capacity. In addition, $14.6 million would be used to cover the company’s incremental working capital requirement. There would also be a $1.8 million provision for contingencies.
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ICICI Bank PTCs get top Icra ratings
Mumbai: Icra has assigned a conditional ‘MAAA (SO)’ rating to the Rs 21.43 crore pass through certificates (PTCs) issued by Indian Retail ABS Trust Series 4. The PTCs are backed by car, commercial vehicles (CV) and construction equipment loan receivables originated by ICICI Bank. This is the fourth retail loan receivables-backed issuance by ICICI Bank to be rated by ICRA. This rating, which indicates highest safety, is based on the strength of cahs flows from the selected loans and the credit enhancement mechanisms designed to ensure payment of the debt obligation and the integrity of the legal structure. Under the current transaction, ICICI Bank will assign the receivables arising from the selected pool of contracts to a trust, while continuing to act as servicer.
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