In March 2009, IFMR Capital (presently known as Northern Arc Capital) and Equitas Micro Finance concluded the first securitisation of micro-loans in India. Following that landmark transaction, on October 27th 2009 the associated PTCs (pass-through-certificates or securities) received a ratings upgrade from CRISIL. The senior tranche of PTCs was upgraded from AA (so) to AAA (so) — CRISIL’s highest long term safety rating. The junior tranche was upgraded from BBB (so) to A (so).
This ratings upgrade is based on the performance of the pool, the timeliness of payments to the SPV, and the extent of credit enhancement in relation to the outstanding cash flows on the pool. This upgrade affirms the excellent quality of the underlying assets, and signals the significant potential of microfinance as a new asset class for investors.
