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Rising COVID cases to subdue securitisation market says ICRA
Rising COVID cases are expected dampen the securitisation market, affecting fund-raising for NBFCs in the near term, ratings agency ICRA said.
| 9 April 2021 7:39 AM GMT
NEW DELHI: Rising COVID cases are expected dampen the securitisation market, affecting fund-raising for NBFCs in the near term, ratings agency ICRA said. Despite the healthy activity seen in the securitisation market in Q4FY2021, the rising COVID-19 cases may again create uncertainty among the investors, AbhishekDafria, Vice President and Head, Structured Finance Ratings at ICRA, said in a report. On a positive front, the lockdowns announced by a few state governments at present are less restrictive in comparison to the nationwide lockdown seen last year. Nevertheless, an unabated increase in the COVID cases is likely to bring about fears of harsher lockdowns which could impact the asset quality of retail loans especially for unsecured l
Fears of stricter lockdown amid the second wave of coronavirus infections may affect asset quality of retail loans, thereby impacting the fund-raising ability of housing finance and non-banking finance companies through the securitisation route, according to a report.
Securitisation is the process of pooling and repackaging homogenous illiquid financial assets into marketable securities that can be sold to investors.
Securitisation volume, which stood at Rs 85,000-90,000 crore during the financial year 2020-21, is expected to rise by 40-50 per cent year-on-year in the current fiscal (2021-22), Icra Ratings said in a report.
NBFCs and HFCs securitised volume stood at Rs 40,000 crore of their loans assets in the fourth quarter of fiscal 2020-21, similar to the corresponding quarter of FY2019-20, it added.
Rising Covid cases to subdue securitisation market: ICRA
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ICRA. (Photo: ICRA). Image Source: IANS News
New Delhi, April 8 : Rising Covid cases are expected dampen the securitisation market, affecting fund-raising for NBFCs in the near term, ratings agency ICRA said. Despite the healthy activity seen in the securitisation market in Q4FY2021, the rising Covid-19 cases may again create uncertainty among the investors, Abhishek Dafria, Vice President and Head, Structured Finance Ratings at ICRA, said in a report. On a positive front, the lockdowns announced by a few state governments at present are less restrictive in comparison to the nationwide lockdown seen last year. Nevertheless, an unabated increase in the Covid cases is likely to bring about fears of harsher lockdowns which could impact the asset quality of retail loans especially for unsecured loans such as in the microfinance sector.