Category Archives: TERM LOANS DEBENTURES BONDS AND SECURITISATION

Pool Selection Criteria

Pool Selection Criteria The loans have been originated by the HDFC and conform to the normal credit adopted by it at the time of sanction, subject to its management decision judgement. The oans in the pool comply with the following criteria: - The loans were current at the time of selection - Thcy have a minimum seasoning of 12 months. - The pool consists of loans where the underlying property is situated in the

Entering Into Memorandum of Agreement

Entering Into Memorandum of Agreement The HDFC and the NHB entered into a Memorandum of Agreement on July 7, 2000, to entitle the NHB to take necessary steps to securities the said housing loans, including circulation of the Information Memorandum and collection of subscription amount from investors. Acquisition of the Housing Loans by the NHB The NHB would acquire the amount of balance principal of the housing

Principal Terms of the PTCs

Principal Terms of the PTCs TIle NHB in its corporate capacity as also in its capacity as a sol trustee of the SPV Trust would issue securities in the form of Class A and Class B PTCs. The B PTCs are subordinated to Class A PTCs and act as a credit enhancement for Class A PTC holders. Only Class A PTCs are available for subscription through the issue. The Class B PTCs would be subscribed to by the HDFC itself

Transaction Structure

Transaction Structure The NHB would purchase from the HDFC a pool of retail housing loans that constitute the receivable 10 be securitised. The individual loans, repayable in EMIs, would then be packaged and offered to the investors by way of securities in the' form of PTCs sans recourse to the issuer. The issue proceeds would be used by the NHB to pay the HDFC part consideration, for the receivables purchased.

Mortgage Backed Securities (MBS)

Mortgage Backed Securities (MBS) The securities are backed by the mortgage loans, that is, loans secured by specified real estate property, where in the lender has the right to sell the property, if the borrower defaults. Mortgage-Based Securitisation by the NHB (National Housing Bank) As a part of its role as the apex body in India for promotion of housing finance, the NHB has, initiated since 2000 securitisati

Types of Securities

Types of Securities The securities fall into two groups : Asset Backed Securities (ABS) The Investor rely on the performance of the assets that collateralizes the securities. They do not take an exposure either on the previous owner of the assets (the originator), or the entity issuing the securities (the SPV). Clearly, classifying securities as asset backed seeks to differentiate them from regular securities, wh

Stripped Securities

Stripped Securities Under the instrument, securities are classifies as Interest only (IO) or Principally only (PO) securities. The IO holders are paid had, out to the interest only while the PO holders are paid out of principal repayments only. However, these secunncs are highly volatile by nature and are least preferred hy the investors. Normally, PO securities increase to value when interest rates go dow

Pay Through Security (PTS)

Pay Through Security (PTS) The PTS structure overcomes the single maturity limitations of the pass through certificates. Its structure permits the issuer to restructure receivables flow to offer a range of investment maturities to the investors associated with different yields and risks. The issuer of assets-backed debt are thus Creed from the limitations imposed by the pass through structure which simply provi

Pass Through Certificates (PTCs)

Pass Through Certificates (PTCs) The cash flows from the underlying collateral are passed through to the holders of the securities in the form of monthly payment of interest, principal and prepayments. In other words, the cash flows are distributed on a pro-rata basis to the holders of the securities. The payments occur, when the holder of the underlying asset prepays the remaining principal before the final s

Asset Characteristics

Asset Characteristics The assets to be securities should have the following characteristics. Cash Flow A principal pan of the assets should be the right to receive from the debtors on certain dates, that is the asset can be analysed as a series of cash flows. Security If the security available to collateralising the cash flows is valuable, then this security can be realised by a SPY. Distributed Risk Assets eit