Mumbai, Jan 22 (Agency) Securitisation volume crossed Rs 26,000 crore in the quarter ended December of the current fiscal as more originators entered the market and mutual funds started investing in new issuances, says a report. This takes the total volume for the first nine months of this fiscal to around Rs 48,000 crore, though that is still way behind FY 2018 (around Rs 60,000 crore), FY 2019 (near Rs 145,000 crore) and FY2020 (close to Rs 152,000 crore), Crisil Ratings said in a report.
The volume in the October-December quarter was higher than the cumulative Rs 22,000 crore logged in the first half, it said. ‘Disbursement activity at non-banking financial companies (NBFCs) has resumed in sync with the uptick in economic activity. With a gradual increase in investor appetite and amenable market conditions in the form of a lower interest rate environment, NBFCs have again started raising incremental funds through securitisation,” the agency’s senior director Krishnan Sitaraman said. The stability in pool collections in the post-moratorium period has been a sign of confidence in securitisation for investors.
Consequently, mutual funds have joined banks, insurance companies, and high net-worth individuals (HNIs) as investors in securitisation transactions, albeit gradually, the report said. The agency said as much as 63 per cent of the volume securitised this fiscal has been through the direct assignment (DA) route, including those under the government-sponsored Partial Credit Guarantee scheme. Issuance of innovative structured products, such as replenishing securitisations and covered bonds, crossed 2 per cent of the transaction volume in the third quarter, indicating greater acceptance by the market, especially HNIs, it noted.
Rising collection efficiency in securitised pools with underlying microfinance loans has increased investors’ appetite for fresh exposures in the sector, it said. The agency said as economic activity rebounds, NBFCs are expected to shift their focus to incremental disbursements and consider securitisation as a key funding source.
It said if collection efficiencies continue to be steady, securitisation volumes could spurt in the fourth quarter and, possibly, equal or even surpass cumulative issuance witnessed in the first three quarters of the current fiscal. Traction in securitisation volumes will however be dependent on continued improvement in collection efficiency and stabilisation of the business environment for NBFCs, the agency’s senior director Rohit Inamdar said in the report.