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'Structured fin ratings to remain stable in 2013'

Last Updated: Thursday, January 31, 2013 - 22:46

Mumbai: Ratings in the structured finance space are likely to remain stable in 2013 despite increasing stress on the asset quality front in some of the segments like commercial vehicle loans, says a report by India Ratings.

"Ratings in the structured finance space will remain stable this year. While there is a likelihood of pressure on asset quality in the commercial vehicle space due to subdued freight rates, repayment capacity of borrowers is likely to increase in the tractor loan segment," India Ratings Associated Director for Structured Finance Purav Shah told reporters Thursday.

He further said the outlook for residential mortgage-backed securitisation (RMBS) will also remain stable due to a possible downward trend in the interest rate cycle.

Structured finance, which is mostly securitisation deals in the country, has gained momentum in recent past on the back of increased need for credit enhancement and risk diversification.

Referring to structured finance done in the commercial vehicle space, the report said despite an increase in diesel prices, the rate of increase of freight rates will remain subdued, which will impact the margins.

Similarly, the report also pointed out that increase in the minimum support price (MSP) for farm produce will improve the market for structured finance in the tractor segment as use of tractors gain wider currency.

Referring to recent regulatory guidelines on securitisation, the report said they are credit-positive.

The Reserve Bank had come up with securitisation guidelines recently, specifying the minimum holding period of the loan, and capping of interest rate among others.


First Published: Thursday, January 31, 2013 - 22:46
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