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Informist, Wednesday, Sept. 10, 2025

--S&P: India rtg upgrade positive for global scale rating on securitisation 

--CONTEXT: S&P upped India sovereign rating by a notch to 'BBB' in Aug 

MUMBAI/NEW DELHI – The recent ratings upgrade by S&P Global Ratings on India shows promise for future global scale ratings on the nation's securitisation transactions and structured finance market, the ratings agency said in a report Wednesday. The total securitisation issuance in India hit INR 2.35 trillion in 2024-25 (Apr-Mar), growing 23.7% since FY20, the report said.

In August, the ratings agency raised its long-term unsolicited sovereign credit ratings on India to 'BBB' from 'BBB-', citing Indian economy's resilience and sustained fiscal consolidation for the rating upgrade. In Wednesday's report, S&P said its global scale rating on securitisation transactions which have exposure to India's sovereign obligations could be up no higher higher than the sovereign rating. However, those transactions in which underlying assets have no direct exposure with the sovereign could be up to six notches higher than India's rating, up to a maximum of 'AA'.

"Under our notching framework, we can rate a structured finance security up to two notches above the sovereign if we consider the transaction's sensitivity to a sovereign default risk to be 'high'," S&P Global ratings said. "We can notch up to four notches for a 'moderate' sensitivity and up to six notches in the case of a 'low' sensitivity." The sensitivity of the underlying assets and robustness of the transaction structure are a key part of its assessment of the transaction being tied to the sovereign, the ratings agency said in the 'Frequently Asked Questions' report.

As part of the sovereign rating upgrade, S&P had also last month revised upward its transfer and convertibility assessment for India to 'A-' from 'BBB+'. Structured finance securities issued in foreign currency can be no higher than India's transfer and convertibility assessment while domestic currency issuances are not constrained by this. India's issuances are primarily domestic to date, but included one $300 million cross-border transaction in early 2024, S&P said.  End

US$1 = INR 88.12

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Gowri Lakshmi and Aaryan Khanna

Edited by Akul Nishant Akhoury

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