SKS Microfinance gets ‘highest safety’ rating

Microfinance Focus, Oct. 12, 2009: SKS Microfinance’s securitized portfolio worth Rs. 137 crore (Rs. 1,370 million) with YES Bank has been rated by Credit Analysis & Research Ltd. (CARE) as PR1+ SO (Highest Safety) rating, said a press release on Monday.

The Securitization enables YES Bank to purchase from SKS Microfinance 1,58,878 micro loans offered to Schedule Caste, Schedule Tribe and other minority sections of the society.

Announcing this landmark transaction, Mr. S. Dilli Raj, CFO of SKS Microfinance, said, “This is a major step in ‘financial inclusion’. Rated transactions of this kind accelerate capital access to MFIs and provide social benefits to the unbanked rural poor. The PR1+ SO (Highest safety) rating indicates the impeccable credit quality of the portfolio. Innovative funding solutions of this nature will help the sector to broad base its Sources mix and benefit from the concomitant ‘capital relief’. ”

The transaction has been assigned with a rating opinion of PR1+ SO (Very Strong Safety) by CARE following an analysis of over 1 million loans extended by SKS. The assignment transaction is credit enhanced with extra collateralisation and Cash margin which are subordinated to payouts to YES Bank. The Pool is geographically diversified across 17 states. The Pool has net seasoning of 10 weeks and the average ticket size is Rs.11,752. SKS will service the pool contracts as an agent.

SKS Microfinance has in recent times announced a series of new plans in fund-raising including many firsts like ‘Weaker section’ Pool securitization deal with ICICI, issuance of Non-Convertible Debentures, Commercial Papers and listed debt securities etc.

SKS Microfinance is providing collateral-free income generation loans worth Rs. 9,840 crore to 53 lakh poor households across 19 states through 1,676 branches.

Established in 1998, Hyderabad-based SKS Microfinance has become India’s largest microfinance organization with an annual growth rate of 128 per cent.

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