Issuance volume for securitisation drops 20% in FY13: ICRA

Mumbai: Ratings agency ICRA today said issuance volume for securitisation dropped by 20 per cent to Rs 30,250 crore in FY13.

"This decline was mainly because single corporate loan securitisations, also known as Single Loan Collateralised Loan Obligations (CLOs) or Loan Sell-Offs (LSOs), completely stopped while some bilateral loan pool assignments were done on an unrated basis," ICRA said in a statement here.

Securitisation is a process through which illiquid financial assets are pooled and repackaged into marketable securities. The number of transactions was also lower by 8 per cent during the just-concluded fiscal, the agency added.

The LSOs, which came in at Rs 2,217 crore in the previous fiscal, completely stopped in FY13, ICRA said.

The asset-backed securitisation (ABS) transactions accounted for 88 per cent, or Rs 26,631 crore, of the total volume, while residential mortgage-backed securitisation (RMBS) made up 12 per cent of the total pie at Rs 3,620 crore.

Collectively, RMBS and ABS, which constitute the retail securitised portion, were down 14 per cent vis-a-vis the year ago period.

Helped by a reclassification of priority sector lending guidelines wherein wherein bank finance to non-bank lenders no longer qualifies as PSL, banks were the most active ones in the securitisation market to meet targets as eligible loan receivables are classified as PSL, ICRA said.

The securitisation markets will alter again once clarity on taxation comes in, the rating firm said.