CRISIL has assigned its 'Provisional CRISIL AA+(SO)/Stable' rating to Non-Convertible Debentures (NCDs) to be issued by PTC India Financial Services Limited (PFS; rated 'CRISIL A+/Stable/CRISIL A1+'). This is the first rated instrument in the Indian debt capital markets which involves credit support from partial credit enhancement by a bank as well as a 'covered bond' equivalent structure.
The NCDs to be issued by PFS will be backed by a partial credit enhancement (PCE) of Rs 116.0 crore extended by State Bank of India (SBI; rated 'CRISIL AAA/CRISIL AA+/FAAA/Stable/CRISIL A1+'), Debt Service Reserve Account (DSRA) of Rs 45.0 crore built by PFS over the first year, and cash flows escrowed from loans extended to identified, commissioned, operational, renewable projects with aggregate principal of Rs 671.4 crore as of 30th June 2019. The NCDs will have minimum principal cover of 109% from identified loan receivables for the tenure of the transaction.
The identified loans will be assigned to a bankruptcy-remote special purpose vehicle (SPV) upon occurrence of certain predefined trigger events, one of which is a downgrade in the rating of PFS by two or more notches. Post the assignment, the loan receivables will be utilised purely for payment of the NCDs, repayment of drawn PCE, the associated PCE interest and PCE fees, and the cash flows will not flow back to the Issuer until the NCDs are outstanding. Thus, post the assignment, the NCD-holders will have dual recourse to PFS (cash flows from normal operations of the company) and the bankruptcy remote SPV (to which the identified loan receivables are assigned).
Interest is payable on the NCDs on a half-yearly basis and principal repayments are scheduled as equal annual installments from year 3 to year 10. Based on the t-structure defined, on each payout date, DSRA and PCE will be drawn, to the extent required, if the amounts funded by PFS and the identified loan receivables are not sufficient to make NCD payouts.
In the absence of the above structural features, the rating of the NCDs would have been the same as rating of the Issuer.
Shares of PTC INDIA FINANCIAL SERVICES LTD. was last trading in BSE at Rs.14.6 as compared to the previous close of Rs. 14.75. The total number of shares traded during the day was 43176 in over 86 trades.
The stock hit an intraday high of Rs. 14.7 and intraday low of 14.4. The net turnover during the day was Rs. 628267.