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India’s first ever covered bond issue raises Rs 25 cr

ICRA has assigned AA-structured obligation rating for the non-convertible debentures of the company with the covered structure.

Published: 16th January 2019 03:44 AM  |   Last Updated: 16th January 2019 04:42 AM   |  A+A-

By Express News Service

NEW DELHI: Ajmer-based non-banking financial company Kogta Financial (India) Ltd has raised `25 crore in the country’s first ever covered bond offering, a ratings report from ICRA released on Monday showed. ICRA has assigned AA-structured obligation rating for the non-convertible debentures of the company with the covered structure.

Vibhor Mittal, Group head-Structured Finance, ICRA Limited, said, “The covered bond issuance by Kogta Financial India Limited is a landmark transaction in the Indian debt capital market and first-of-its-kind. Worldwide, covered bonds are a 2.5 trillion Euro market”.

Covered bonds as an asset class are considered to be a safe investment option: this issue if Kogta is not able to make the bond payment, collections from the bankruptcy remote covered pool are available to the bond investors. 

In this case, post bond issuance, the issuer is to create hypothecation on vehicle loan receivable for a cover pool with principal amount of `29.24 crore.

“This transaction shows that covered bonds can be structured using general legal principles, and should provide an impetus to the growth of Indian covered bond market going ahead,” Mittal said. 



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