TEXT-Fitch assigns final rtgs to STFCL's Direct Assignmt Jly 08
(The following statement was released by the rating agency)
Aug 28 - Fitch Ratings has assigned a final rating of 'AAA(ind)(SO)' with a Stable Outlook to the purchaser payouts in a direct assignment transaction. The Commercial Vehicle (CV) and Commercial Equipment (CE) pool assigned to the purchaser was originated by Shriram Transport Finance Co. Ltd. (SRTR.BO: Quote, Profile, Research) (STFCL, the "originator" or "seller", 'AA(ind)'/Stable). The final rating addresses the timely payment of interest and the timely payment of principal to the purchaser by the scheduled maturity date of 15 April 2012 in accordance with the transaction documentation.
The loans that are assigned to the purchaser have an aggregate outstanding principal balance of INR271.3m and future receivables of INR338.8m, as of the cut-off date on 31 May 2008.
The final rating is based on the origination, servicing, collection and recovery expertise of STFCL, the legal and financial structure of the transaction and the credit enhancement and liquidity facility provided by the originator. In this transaction, the credit enhancement for the pool is in the form of a fixed deposit provided by the originator equal to 13.7% of the future receivables as of the cut off date. There is also a liquidity facility of 2.4% of the future receivables.
As part of its analysis, Fitch built a pool cash flow model based on the financial structure of the transaction. The agency also analysed historical data to determine the base values of key variables that would influence the level of expected losses in this transaction. The base values of the default rate, recovery rate, time to recovery, collection efficiency, prepayment rate and pool yield were stressed to assess whether the level of credit enhancement was sufficient for a 'AAA' rating.
A new issue report for this transaction will be available shortly on Fitch's website www.fitchindia.com.
© Thomson Reuters 2009 All rights reserved
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