Moody's: Indian structured finance market expected for rapid growth

Emerging Markets Economy, Apr 8, 2003

The Indian structured finance market in general is poised for rapid growth in the next two to three years, with asset-backed securitisation (ABS) set to remain the dominant asset class, said Moody's Investors Service.

In particular, Moody's and its Indian partner ICRA Ltd. expect the domestic legal environment for securitisation to improve, leading to a significant rise in the investor base. "Another key anticipated development is an improvement in the efficiency of deal structures via the use of multiple tranches, which will benefit originators interms of more efficient and regulatory-compliant transactions," explained Neal Shah, a Moody's Vice-President / Senior Analyst and co- author of the report.

The emergence of a liquid secondary market is likely to be a gradual process, Shah adds, but may well be boosted by the larger investor base and a growing understanding of the risks and strengths of ABS transactions.

In the first ten months of FY2003 (April 2002 to January 2003), there were a total of 46 rated structured finance transactions in India worth a total of INR50.4 billion (US$ 1.06bn), an increase of 48% on an annualised basis from the previous year. (Emeconomy.com)