India’s structured finance deals double in H1 2007: Moody’s

India’s structured finance deals double in H1 2007: Moody’s


Moody’s Investors Service says that domestic issuance of structured finance transactions in India grew 90% to $5.5 billion in the first half of 2007 from $2.9 billion in the same period the previous year. Deal numbers almost doubled as well.

“This vigour confirmed the market has recovered the fast pace observed since 2000," says Dominique Gribot-Carroz, a Moody’s AVP in Hong Kong and the author of a new report jointly written with Moody’s affiliate in India — ICRA — which reviews the market for H1 2007 and examines the outlook for H2 2007.

“With the retail lending business in India likely to grow, although possibly at a slower rate, we expect ABS issuance to increase in H2 2007," says Gribot-Carroz, adding, “Banks, especially those active in the retail finance business, are likely to face capital constraints."

In H1 2007, ABS issuance grew more than 90% compared to H1 2006. ABS accounted for 64% of the issuance in H1 2007, thus remaining the largest product class.

Issuance volume was also propped up by the securitization of single corporate loans, which accounted for 29% of issuance in H1 2007.

Only 3 RMBS transactions closed in H1 2007 and accounted for 7% of issuance. While RMBS has a huge potential — given the significant expansion in the underlying housing finance business — the long tenure of such paper together with the lack of secondary market liquidity deters certain investors.

The India report is being released in conjunction with a similar structured finance report for Korea, a combined report for China, Hong Kong and Taiwan, another combined report for Singapore, Malaysia, Thailand and Indonesia, a report summarizing developments in the entire region, and another on regional derivatives.