ICICI to raise Rs 133cr via auto-loan bonds

Ujjal K Basu Roy

Mumbai, Dec 10: ICICI Ltd is all set to hit the market with a Rs 133 crore securitised issue of its auto-loan portfolio. The move will enable ICICI to get the assets off its books thereby bringing in funds and letting it breath easy on the capital adequacy ratio front.

The Credit Rating Information Services of India Ltd (Crisil) had earlier assigned the issue with a ‘AAA(so)’ rating indicating high safety on August 30. But the issue had not been placed because of the September 11 attacks. The placement had been postponed because of the volatility in the markets and downturn that followed the attacks. The placement is expected soon since the markets have more or less recovered.

Some details are still being studied since three months have passed after they were initially rated. The pool is being looked at since the cash flow for the first four months will have to be knocked out. Thus, the investor pass through certificates (PTCs) will have marginally lesser cash flows since cash flows from December 31 will have to be taken into account.

The cash flow calculations are being changed since some receipts will have come in during the last three months. The credit enhancement and the rationale for the rating will also have to take this into account. The credit enhancement will have to be reduced in amount but in percentage terms, it could remain the same.

When contacted, ICICI officials said that the securitisation was part of normal procedure and that it has been doing so for the last three years.

This is the first time that ICICI is securitising its auto loan portfolio after the announcement of its reverse-merger with ICICI Bank.

ICICI is set to become the first universal bank in the country after boards of both the financial institution and its subsidiary ICICI Bank approved the FIs reverse merger with its banking subsidiary at a ratio of 1:2 (one domestic share of the bank for every two domestic shares of the FI) on October 25.

Both the entities have submitted to the RBI that they would comply with all the regulatory norms applicable to banks and adhere to RBI’s decision in the matter.

With this merger, the ICICI universal bank, with assets of Rs 95,000 crore (September 30, 2001) would have pipped the apex FI, IDBI which has Rs 71,800 crore (as on March 31, 2001), to become the second largest banking institution in the country after the commercial banking behemoth State Bank of India (SBI), with assets of over Rs 316,000 crore.