CRISIL has assigned its ‘P1(so)’ rating to Series A1 PTCs issued by Epsilon Pioneer IFMR Capital 2010, a trust settled by IDBI Trusteeship Services Ltd. The PTCs are backed by a pool of receivables from microfinance loans originated by Grameen Financial Services Pvt Ltd (GFSPL; rated ‘P4+’ by CRISIL). The rating is based on the credit quality of the pool cash flows, GFSPL’s origination and servicing capabilities, the credit support available to the PTCs, the payment mechanism for the transaction, and the soundness of the transaction’s legal structure.
#Indicates door-to-door tenure, between allotment date and legal final maturity; actual tenure will depend on level of prepayments in pool, exercise of clean-up call option, and extent of shortfalls & Investors in Series A1 pass-through certificates (PTCs) are entitled to receive interest on a fortnightly basis; there is an expected schedule for principal repayments for Series A1; however, the structure allows for principal payments to be made by the maturity date of the PTCs (ultimate payment structure)
The transaction has a ‘par’ structure, wherein the trust will pay a purchase consideration equal to the pool principal at the time of securitisation. The trust will raise a part of the consideration by issuing Series A1 PTCs, which will have the first priority right on the trust’s property. Investors in Series A1 PTCs are entitled to receive interests on a fortnightly basis. There is an expected schedule of principal repayments; however, the transaction structure allows for principal repayments to be made by the maturity date of the PTCs (ultimate payment structure), which is eight months after the issue date. The trust will receive the remaining consideration from a subordinated contributor who will have fully subordinated right on the trust’s property.
The pool principal being securitised consists of receivables from microfinance loans. The pool has a weighted average seasoning of 21 weeks, with Karnataka accounting for 80 per cent of the pool cash flows and the top three districts accounting for 27 per cent of the pool cash flows. The average ticket size of the pool is Rs.11,316. All the contracts in the pool are current as on the pool cut off date.
About the Originator
Incorporated in 1998, GFSPL (formerly Sanni Collection Pvt Ltd) is a non-deposit-taking non-banking financial company, registered with the Reserve Bank of India. In October 2007, GFSPL acquired the entire microfinance portfolio of Grameen Koota (GK). GFSPL organises joint lending groups, and provides top-up loans to clients. Following the takeover of GK’s business, GFSPL’s number of branches increased to 215, borrower strength to 0.46 million, and its presence has spread to 45 districts (as of December 31, 2010).
For 2009-10 (refers to financial year, April 1 to March 31), GFSPL reported a profit after tax (PAT) of Rs.9.5 million on a total income of Rs.537.8 million, against a PAT of Rs.4.8 million on a total income of Rs.340.5 million for the previous year. For the six months ended September 30, 2010, GFSPL reported a PAT of Rs.63.1 million on a total income of Rs.502.2 million.