Recent defaults by Infrastructure Leasing and Financial Services (IL&FS) have highlighted the continuity risks of the country’s asset-backed security (ABS) servicers, Fitch said in its report on Thursday.
It further said the failure of IL&FS has significantly undermined market sentiment towards the the country’s non-bank financial institution (NBFI) sector and their ABS issuance.
Transaction flow has stalled and there is a rise in yields on the securitisation notes of NBFIs, it added.
IL&FS and its subsidiaries are facing liquidity crisis and have defaulted on several debt repayments recently.
According to the rating agency, IL&FS was not itself a counterparty to any internationally rated ABS notes, but NBFIs act as the originators and servicers for most Indian ABS transactions.
