OREANDA-NEWS. Fitch Ratings has affirmed four pass-through certificates (PTCs) from two Indian ABS transactions, Aeon Trust 2013 and Shri Trust-B-2013. These transactions are backed by commercial-vehicle loans originated by Sundaram Finance Limited (SFL), which also acts as a servicer for the transactions.

The list of rating actions is shown below:
Aeon Trust 2013
INR139.6m Series A2 PTCs due February 2017: affirmed at 'BBB-sf'; Outlook Stable
Series A1 PTCs paid in full on 17 February 2014

Shri Trust - B - 2013
INR123.6m Series A PTCs due February 2017: affirmed at 'BBB-sf'; Outlook Stable

KEY RATING DRIVERS
The affirmations reflect satisfactory asset performance and sufficient credit enhancement (CE) for the rated notes. For each transaction, CE has increased from the closing date, driven by the steady amortisation of the static portfolios. As these pools amortised, most portfolio characteristics have not changed materially from when the transactions closed. The pools have remained diversified in terms of geography, asset type, loan-to-value and yield. The weighted average seasoning has increased to more than 40 months; loans have become increasingly concentrated in more recent vintages; and the proportion of loans for new commercial vehicles has increased to above 99%.

Delinquency levels have been kept low by SFL's satisfactory origination standards and efficient servicing capabilities.

For both transactions, the CE is in the form of a fixed deposit, and they have not been utilised since closing as excess spread has been sufficient to absorb charge-offs to date.

Fitch expects the two transactions to performance better in 2015 than in 2014, based on its expectations of improving growth in the Indian economy and the continued amortisation of the underlying portfolios.

RATING SENSITIVITIES
Fitch evaluated the rating sensitivities of each transaction under an increased default rate scenario and a decreased recovery rate scenario.

As Aeon Trust 2013 and Shri Trust-B-2013 have current CE of 81% and 89.1% respectively, as of the payout date of 16 March 2015, there will be no rating impact for both transactions under the most stressful default rate scenario of 100% asset default or the most stressful recovery rate scenario of no recoveries.

Fitch considers the likelihood of any downgrades to be remote, based on its asset analysis and outlook on India's economy.

The ratings may be upgraded if the ratings of the credit collateral bank holding the first-loss credit facility deposit are upgraded to above 'BBB-' and the portfolio performance remains sound, with adequate CE that can withstand stress at above a 'BBB-sf' rating scenario.

A comparison of the transactions' representations, warranties and enforcement mechanisms (RW&Es) to those of typical RW&Es for this asset class is available by accessing the reports and links given under Related Research below.