Securitisations Surge In Q4-FY21 But Still Below Pre-Covid Levels

Q4 of fiscal 2021 witnessed securitisation transactions amounting to Rs. 40 thousand crores to become the highest grossing quarter for the fiscal, CRISIL has stated. Despite this last-quarter surge, securitisation volumes closed below the psychological Rs 1 lakh crore mark last fiscal, down from Rs. 1.9 lakh crore clocked in each of the previous two fiscals, the rating agency has noted.

"The securitisation market had started to open up last fiscal as containment restrictions were withdrawn, commercial activity resumed and the moratorium period announced by Reserve Bank of India drew to a close in August 2020. As a result, deals comprising nearly three-fourths of annual volume were executed in the second half of the fiscal. Further, as business activity picked up and borrowers resumed repayments, investors drew comfort from rising collection efficiency in securitised pools, which CRISIL Ratings had noted. Additionally, non-banking financial companies (NBFCs) resumed disbursements and raised funds through securitisation to fund incremental needs," the rating agency has said.

Over 100 entities securitised assets during the fiscal, with more than 15 entering the market for the first time. Private and public sector banks invested in more than two-thirds of securitisation issuances, while foreign banks invested in ~10%. Mutual funds, insurance companies, NBFCs, and high-networth individuals (HNIs) accounted for bulk of the rest.

Asset-backed securitisation (ABS) deals accounted for nearly two-thirds of securitised volumes. Mortgage-backed securitisation (MBS) issuances, with underlying home loans and loans against property, comprised the remaining, with investors drawing comfort from stable collection efficiency in MBS pools in the post-moratorium period.

Says Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, CRISIL Ratings Ltd, "In the Indian milieu, mortgage loans have been appreciated as a safe asset class for investors, given low delinquencies and minimal losses historically. Bearing testimony to this, mortgage loan collection efficiencies recovered faster from the pandemic-driven slowdown than other asset classes last fiscal."