India's First Mortgage-Backed Pass-Through Certificates: What Does It Mean for Investors?
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Synopsis
In a groundbreaking move for India's financial landscape, the nation's first mortgage-backed Pass-Through Certificates have been listed on the NSE. This development not only signifies a new era in housing finance but also opens up unique investment opportunities for stakeholders. Discover how this innovative step can shape the future of housing finance in India.
Key Takeaways
- The first mortgage-backed PTCs have been successfully listed on the NSE.
- The issue size was Rs 1,000 crore with a full subscription.
- The coupon rate was determined through the NSE's EBP platform.
- These PTCs hold a AAA(SO) rating, ensuring high credit quality.
- This issuance represents a vital step in enhancing liquidity in the housing finance sector.
Mumbai, May 5 (NationPress) - In a significant milestone for India's housing finance and debt markets, the nation's inaugural mortgage-backed Pass-Through Certificates (PTCs) were officially listed on the National Stock Exchange (NSE) on Monday.
These PTCs, structured by RMBS Development Company Limited, are secured by a pool of housing loans initiated by LIC Housing Finance Limited.
The total issue size reached Rs 1,000 crore, consisting of 1,00,000 PTCs, each with a face value of Rs 1,00,000. The offering saw full subscription, showcasing robust investor enthusiasm.
This groundbreaking issuance marks the first of its kind in India, where the coupon rate was determined through the Electronic Book Provider (EBP) platform of the NSE.
The final coupon rate was established at 7.26 percent per annum, with a tenure of nearly 20 years.
The PTCs hold a premium AAA(SO) rating from both CRISIL and CARE Ratings and are issued in a dematerialized format, making them available for secondary market trading.
The listing was officiated by M. Nagaraju, Secretary of the Department of Financial Services, Ministry of Finance, who commemorated the occasion by ringing the ceremonial bell.
During his speech at the event, Nagaraju underscored the vital role of the housing and housing finance sectors within the broader economic context.
He acknowledged that housing is intricately linked with various industries, including infrastructure, and stressed the pressing need to address the nation's escalating housing demand to drive overall economic progress.
Nagaraju also noted that securitization, through instruments like these PTCs, can connect the housing finance market with the larger debt market.
Highlighting the significance of Residential Mortgage-Backed Securities (RMBS), he remarked that such instruments could revolutionize liquidity and bolster the growth of India's housing finance ecosystem.
The listing ceremony was attended by numerous senior officials from banks, housing finance companies, and various financial institutions, representing a pivotal move towards enriching the securitization market and expanding investment prospects in the nation.
Point of View
This historic issuance of mortgage-backed PTCs marks a transformative step in India's financial market. It highlights the growing sophistication of the housing finance sector and its crucial role in enhancing economic stability and growth. As the nation strives to meet its housing demands, innovative financing solutions like these will be essential in bridging gaps and facilitating investments.
NationPress
23/05/2025
Frequently Asked Questions
What are Pass-Through Certificates?
Pass-Through Certificates (PTCs) are financial instruments that pool together various types of loans and pass the income generated from these loans to the investors.
Who structured the first mortgage-backed PTCs in India?
The first mortgage-backed PTCs in India were structured by RMBS Development Company Limited.
What was the total size of the PTC issuance?
The total size of the PTC issuance was Rs 1,000 crore.
How long is the tenure of these PTCs?
The tenure of these PTCs is nearly 20 years.
What is the coupon rate of the PTCs?
The coupon rate of the PTCs is set at 7.26 percent per annum.
