India's ICICI Bank recently launched a novel auto loan deal sized at Rs8.35 billion (US$182 million). "This deal has been groundbreaking for India, primarily because it adopts a new structure that addresses investor concerns relating to uncertainty of cash flows in ABS because of prepayment risk," said Prashant Purker, head of syndication and structured finance at ICICI Bank. ICICI Bank acted as the originator and arranger for the privately placed issue.
He added that the payouts in the A1 and A2 notes in the transaction have an equated monthly payment (EMI) structure, whereby the investors receive uniform "payouts" per month. Furthermore, an additional prepayment note, Series P, has been introduced to absorb the prepayments in the auto loan pool, thus reducing cash-flow uncertainty for Series A1, A2 and A3.