SKS Microfinance Pool Gets "Highest Safety" Rating
Oct '2009

First   Microfinance Securitisation in India to receive ‘Highest Safety' rating by Credit Analysis & Research Ltd.

Hyderabad, October 12, 2009: For the very first time in the MFI sector, SKS Microfinance’s securitized portfolio worth Rs 137 crore with YES Bank has been rated by Credit Analysis & Research Ltd. (CARE) as PR1+ SO (Highest Safety) rating. The Securitization enables YES Bank to purchase from SKS Microfinance 1,58,878 micro loans offered to Schedule Caste, Schedule Tribe and other minority sections of the society.

Announcing this landmark transaction, Mr. S. Dilli Raj, CFO of SKS Microfinance said, “This is a major step in ‘financial inclusion’. Rated transactions of this kind accelerate capital access to MFIs and provide social benefits to the unbanked rural poor. The PR1+ SO (Highest safety) rating indicates the impeccable credit quality of the portfolio. Innovative funding solutions of this nature will help the sector to broad base its Sources mix and benefit from the concomitant ‘capital relief’.

The transaction has been assigned with a rating opinion of  PR1+ SO (Very Strong Safety) by CARE following an analysis of over 1 million loans extended by SKS. The assignment transaction is credit enhanced with extra collateralisation and Cash margin which are subordinated to payouts to YES Bank. The Pool is geographically diversified across17 states. The Pool has net seasoning of 10 weeks and the average ticket size is Rs.11,752/. SKS will service the pool contracts as the servicing agent.

SKS Microfinance has in recent times announced a series of innovations in fund raising including many firsts like ‘Weaker section’ Pool securitization deal with ICICI, issuance of Non Convertible Debentures, Commercial Papers and listed debt securities etc.  All of these are aimed at expanding the funding options available to MFIs.