India's economic growth due to RMBS's strong performance

New Delhi, Nov 16 (UNI) The continued robust economic climate in India has underpinned the relatively strong performance from Indian residential mortgage-backed securities (RMBS).

''The strong performance is linked to two main factors including the growth in the domestic economy and that witnessed in the property markets,'' Fitch Mumbai Head (Structured Finance Team) Asina Ajwani said in the agency's first Indian RMBS performance bulletin published today.

This is reflected in stable arrears in a delinquency index and the strong credit cover multiple (CCM) for each of the transactions.

CCM is a surveillance tool developed by Fitch that measures the extent to which note holders are protected against stressed losses through credit enhancement levels. While one transaction may have higher arrears than another, this may have been envisaged in the credit characteristics of that portfolio and reflected in higher credit enhancement requirement initially.

Further, Fitch developed a delinquency index to benchmark delinquency rates between transactions with the aim to provide investors with better insight into sector trends. The 180 days-plus delinquency index is based on average delinquency rates weighted by the total current mortgage balance.

Despite the small number of deals in the Indian market, the index nevertheless shows a market with highly stable arrears performance.

In addition to the CCM and delinquency index, Fitch also closely monitors the impact of key performance indicators such as prepayment rates, collection efficiency and interest rate movements and assesses their impact on the timely payment of interest and principal due on the pass-through certificates.

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