Indian Collateralised Loan Obligation Market - Can Support Credit Growth For Lower Rated Entities: ICRA
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ICRA Research Report
The domestic collateralised loan obligation market has seen limited issuances in the past five-year period unlike the CLO market in the West where the product is well-accepted and has seen a resurgence in issuances in CY21 post Covid-19.
CLO structures have been issued in the domestic market mainly by non banking financial companies so far.
The underlying borrowers in the securitised pools have also been NBFCs.
The senior tranche in CLO structures have enjoyed higher ratings than the average rating of underlying borrowers due to the presence of multiple borrowers in the pool and availability of credit enhancement in the form of a junior tranche and cash collateral.
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