Crisil assigns first rating to multilateral guaranteed instrument

THE CREDIT Rating Information Services of India (Crisil) has assigned the first ever rating in India to a debenture programme backed by a guarantee from Netherlands Development Finance Co. (FMO), a leading multilateral development finance institution. In line with its efforts to rate instruments with new and innovative structures and deepening the Indian debt markets, Crisil has assigned a rating to a debt issue backed by a guarantee from FMO.

The Rs. 30 crore debenture programme of Srei International Finance (SREI) has been assigned AAA (FSO) (pronounced triple A foreign structured obligation) rating, which indicates highest degree of certainty regarding timely payment of financial obligations on the instrument.

The Nederlands Financierings-Maatschappij voor Ontwikkelingslanden NV or Netherlands Development Finance Co. - is a leading development finance institution in Europe with total assets of Euro 1.27 billion in 1999. The State of Netherlands holds 51 per cent in FMO. The FMO provides long-term loans and equity investments in financial institutions and companies in the private sector in developing countries. It is rated AAA by Standard & Poor's .

This rating is based on an agreement between FMO and Srei, wherein the former has given an unconditional and irrevocable guarantee as regards repayment of obligations on the above debt programme. One unique feature of the guaranteed structure is that in the event of default, the FMO would step in and make accelerated payments of both principal and interest.

The proposed debt issue of Rs. 30 crores would be a 10-year paper and the principal would be repaid in equal instalments from the third to the tenth year.

Srei is an asset financing company with primary focus on financing infrastructure-related projects and equipment. As of March 2000, the funds deployed of the company stood at Rs. 586 crores. During 1999-2000, the company on a total income of Rs. 725 crores registered a net profit of Rs. 9.45 crores.

- Corporate Bureau

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Section  : Business
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