The Hindu Business Line : Sundaram Fin sells loan assets to StanChart to raise Rs 213 cr

SUNDARAM Finance Ltd has sold off some of its loans assets to Standard Chartered Bank to raise Rs 213 crore. The company last week issued CRISIL-rated `pass through certificates' (bonds backed by the revenues from the loan assets) to the bank.

According to Mr M. Ramaswamy, Vice-President - Finance & Accounts, Sundaram Finance went in for securitisation essentially for diversifying funding sources.

He pointed out that the company's capital adequacy ratio was at a comfortable level of over 14 per cent. Out of total borrowings of Rs 4,000 crore for the current year, the funds raised through the securitisation deal was but a small portion, he told Business Line.

Mr Ramaswamy declined to disclose the pricing of the pass through certificates, on the grounds that such information was confidential, but said that securitisation was costlier than other avenues of financing.

Sundaram Finance's loans-sell-off deal was in April 2003, when it raised Rs 50 crore. Company officials had then said that the idea was more to gain experience with the securitisation than anything else.

Last year, the company again raised Rs 85 crore through this route. Last week's deal has thus far been the company's biggest.

In fact, last week was a busy one for Sundaram Finance, when the company got its consortium of lenders to raise its limits to Rs 1,400 crore from Rs 1,170 crore, got a term loan of Rs 100 crore from banks and finalised pricing for a Rs 100 crore long-term debentures that are to be placed with ICICI Securities.

Mr Ramaswamy said that the debentures are part of a Rs 300-crore long term non convertible debenture programme of the company.

The rating agency, ICRA, has rated the debentures LAA+ implying high credit quality.

The company was also in talks with banks for raising another bunch of term loans for Rs 200 crore, Mr Ramaswamy said.

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