India's securitisation market better-placed than US: Crisil

MUMBAI: India's retail securitisation market is better placed than even the US and has shown greater stability with few rating downgrades, a leading rating agency said.

Though the Indian market is small (less than one-hundredth the size of the US market), it has shown greater stability, Crisil said in a press release issued here today.

The relative stability is because of the superior profile of the assets securitised in India and because the financial instruments created out of the securitised assets in India are far less complex than those in developed markets, Crisil said.

"Investors in securitised paper in India have no reason to fear crippling losses of the kind that have hit their US counterparts," the release said.

The robustness of the underlying retail assets is the most significant factor characterising securitisation in India, Crisil said, adding that "unlike in the US, there has been no securitisation of 'sub-prime' housing loans in India."

The loans that have been securitised--principally loans for commercial vehicles, cars, two-wheelers, and (to a limited extent) homes--were made on the strength of the earning capacity of either the assets or the borrowers," it said.

"Thus, unlike the US market which turned out to be vulnerable to residential property price movements, the securitisation market in India is relatively immune to asset price fluctuations," Crisil said.