KMFL securitisation issue gets good response

Mumbai: Kotak Mahindra Finance Limited (KMFL) has mobilised Rs 76.22 crore through its first securitisation transaction of commercial vehicle receivables. The issue was launched on a book-building basis on 19 June 2002.

It received overwhelming response from investors and was closed on 25 June 2002. The book closed at the lowest end of the yield range for each series of the senior PTCs. The scheduled closing date for the issue was 5 July 2002. Kotak Mahindra Capital Company Ltd was the advisor and sole arranger to the issue.

The issue was rated AAA (SO) by Crisil. Such a rating represents the highest degree of safety with respect to the timely payment of the obligations under the certificates.

Three series of PTCs, namely series I-A, I-B and I-C, having average tenures of 5.93 months, 14.83 months and 22.40 months, were offered in the range of 9-9.25 per cent, 9.50-9.80 per cent and 10.20-10.50 per cent, respectively. The issue was well distributed across a number of investors and witnessed early pay at the lowest end of the yield range for all the three options.

Under this transaction KMFL will assign commercial vehicle receivables to the special purpose vehicle — the ABS 2002 series-I trust. The trust will purchase the receivables from KMFL and issue pass-through certificates to the investors. UTI Bank is the trustee for the trust.

The commercial vehicle division of KMFL provides finance against commercial vehicles to fleet-owners, captive users and small road transport operators. The division has performed very well in terms of growing disbursement and maintaining portfolio quality. From Rs 83 crore in 1998-99, disbursements have gone up to Rs 504 crore in 2001-02.

In the last fiscal the division clocked a growth of 90 per cent in a scenario where the industry sales of commercial vehicles grew only marginally. The division has been able to achieve a collection efficiency of more than 99 per cent, and the net non-performing assets of the company is only 0.10 per cent as on 31 March 2002 (as per unaudited figures).