The saga of India's first mortgage-backed securities is set to run for another few weeks, after an attempt to launch the deal was pulled at the last moment.

The deal - which has been nearly three years in the making - is sponsored by the National Housing Bank, the country's governing body for housing finance, and is backed by residential mortgages originated by LIC Housing Finance and the Housing Development Finance Corp. (ASRI 6/15/1998 p.1 and 7/3/2000 p.3).

ICICI Securities and SBI Capital Markets are the arrangers, with the NHB acting as the trustee. The deal was rated triple-A by Credit Rating Services of India and is expected to be worth around Rs600 million ($13.4 million).

According to securitization pros in India, the transaction was officially launched, but pulled quickly, after an interest rate hike by the central bank made the fixed rate securities unattractive to investors.

Experts say that the delay will only be temporary and the deal will reappear towards the end of August, with an increase of 50 to 100 basis points in the coupon. According to a Crisil official, the extra basis points can be squeezed out of the excess spread and the subordination without affecting the rating.

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