ICRA assigns LAAA(SO) rating to ICICI Bank's purchaser payouts

New Delhi, Apr 24 (UNI) Credit rating agency ICRA has assigned conditional LAAA(SO) rating to the Rs 98.32 crore purchaser payouts backed by two wheeler loan receivables originated by ICICI Bank Ltd.

The rating indicates highest credit quality.

The conditional ratings are subject to the fulfillment of all conditions under the structure, review of documentation pertaining to the transaction by ICRA and ICICI Bank, furnishing to ICRA an independent legal opinion on the transaction from the transaction legal counsel.

The conditional ratings are based on the strength of cash flow from the selected pool of contracts, the credit enhancement in the form of credit collateral of 8.55 per cent of initial pool principal and subordination of opening overdue. The ratings are also based on liquidity enhancement available in the form of corporate undertaking from ICICI Bank of 1 per cent of initial pool principal and the integrity of the legal structure.

The selected pool of TW loan receivables is characterised by low seasoning, moderate LTV and complete exclusion of overdue contracts.

As per the transaction structure, the pool of selected contracts will be directly assigned to a single purchaser at its par value as the upfront purchase consideration. The originator will also be paid a pre-determined amount each month as deferred purchase consideration from the pool collections.

Support for meeting the purchaser payouts is envisaged through two distinct sources-- liquidity support is available through a Liquidity Facility (in the form of corporate undertaking from IBL) for meeting shortfall on contracts in softer delinquent buckets (defined as up to 90 days); credit enhancement for the investor payouts through credit collateral (in the form of corporate undertaking from IBL) to be used for meeting shortfall not covered by liquidity facility and subordination of opening overdues on the pool.

ICICI Bank is the leader in the TW finance business with a portfolio size of Rs 2700 crore (as of January 2006).

UNI SS MP GC1632