IFMR Capital recently concluded a multi-originator securitization of micro-loans originated by four Indian microfinance institutions.
IFMR Capital Mosec I, a Rs. 308 million ($6.5 million) transaction is backed by approximately 42,000 micro-loans originated by Asirvad Microfinance Pvt, Sahayata Microfinance Pvt, Satin Creditcare Network, and Sonata Finance Pvt.
IFMR Capital was the structurer, arranger and an investor in the deal's subordinated strip.
The transaction is structured in two tranches of securities: a 77% senior-rated tranche with an expected maturity of six months, and a 23% subordinated strip with an expected maturity of 11 months.
CRISIL has assigned the highest short term rating of ‘P1+’ to the senior tranche. The closing of this offering has resulted in the emergence of a new pricing benchmark in the less-than-six-month-maturity asset class.
"Using the multi-originator securitization structure, we have been able to help a number of MFIs access mainstream capital markets,” said Sucharita Mukherjee, CEO of IFMR Capital. “Given the sizes of the institutions and the limited availability of capital to generate unencumbered portfolios, accessing capital markets on their own is an unviable option for most small and medium MFI. By pooling together the loan portfolios of these high-quality MFIs, we have demonstrated that these MFIs can access funding at a much lower cost than their average cost of funds. To the best of our knowledge, this is the first multi-originator securitization of micro-loans in the world".”