The securitisation volumes especially in retail loans of finance companies and mortgage lenders will see healthy growth in 2021-22 (FY22), after experiencing contraction in Fy21 so far, according to Icra.
Also, the credit quality of the rated pass-through certificates (PTCs) should remain â€˜Stableâ€™ during FY2022. Even though collections may not have reached pre-Covid levels, the credit enhancement available in the transactions has further built-up on amortisation of the pools supporting their credit quality.
The rating agency said increase in securitisation volumes for the rest of FY21 an in FY2022 would be supported mainly by growing investor confidence in asset quality due to improving collections. Higher funding requirement of originators on account of rising disbursements and improving business activity post end of lockdown and moratorium period would give a push to activity.
â€œCollections across all asset classes have bounced back sharply since the dip in April 2020 following the nationwide lockdown,” said Abhishek Dafria, Vice President and Group Head – Structured Finance Ratings at Icra.
The resumption of businesses following the gradual easing of the lockdown has helped retail borrowers meet their EMI payments. This has reduced investor wariness towards purchase of retail pools and has led to a healthy momentum in fresh securitisation from September 2020 onwards.
The financing requirements for NBFCs and HFCs are also expected to rise in FY2022 as disbursements would be closer to pre-Covid levels, which in turn would support securitisation market as a tool to diversify funding sources.
The appetite for securitisation of unsecured loans, though, still remains relatively weak and would only improve if the collection efficiency for such asset classes continues to increase in a sustainable manner.