Securitisation Deals Return, But Still At Half Of Pre-pandemic Mark: CRISIL

Securitisation deals gained traction in June after a subdued April and May, boosting the volume for the first quarter of this fiscal by nearly three times on-year to Rs 20,000 crore, CRISIL has stated. Nevertheless, this was still only half of the pre-pandemic average. Further volumes in first quarter of last fiscal were very muted due to sharp impact on collections because of moratorium and the pan-India stringent lockdown. Around 60% of the volumes for the last quarter was seen in June alone.

Says Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings Ltd, "The impact of Covid-19 was clearly visible in the disbursements and collections of financiers. The restrictions on business activity, combined with caution exercised by companies keeping employee safety in mind, brought about an industry-wide slowdown in business operations. Besides, many entities had raised reasonable capital and liquidity to fortify their balance sheets in the past few quarters. This further diminished the appetite for immediate funding given lower disbursements, thus reducing the necessity for securitisation."

Interest in securitisation transactions was rekindled in June as the Covid-19 case load eased. Several transactions under discussions moved ahead and were consummated. Investors such as foreign banks, private banks, public sector banks and mutual funds continued to mark their presence through cherry-picking of investments in securitised assets through either pass-through certificates (PTCs) or direct assignments (DAs).