Securitisation market to hit a record high in FY24: CareEdge

At record highs: The securitisation market is progressing steadily towards a record high in FY24, with total volumes reaching Rs 1,44,000 crore for the first nine months, a report by CareEdge said. The initial half of FY24 reported volumes of approximately Rs 1.01 lakh crore, predominantly driven by a stellar first quarter.

“The third quarter (Q3FY24) registered a combined volume (encompassing both pass-through certificate (PTC) issuances and direct assignment (DA) transactions) of around Rs 43,000 crore,” the report stated. 

According to the report, the stagnant volumes in third FY24 may be linked to a mismatch in the pricing expectations of investors and originators, influenced by tighter liquidity conditions and the Reserve Bank of India's (RBI) concerns about the rapid expansion in unsecured lending. 

Way Ahead

Traditionally, the final quarter of the fiscal year records the highest volumes, and current trends suggest that this pattern is likely to continue. The market volume in each of the three quarters has been similar if we exclude the DA volume of the HDFC entities for Q1 of FY24.  Despite stagnant volumes in the second and third quarters of FY24, the cumulative volume for the first nine months of FY24 demonstrates an approximate 27 per cent increase compared to the same period in the previous fiscal year. 

The RBI has recently adjusted its GDP growth forecast to 7  per cent for the entire year, based on economic expansions of 7.8 per cent and 7.6 per cent in the first quarter of FY24 and Q2 of FY24, respectively. 

The report also added that the robust economic growth is anticipated to stimulate credit growth, potentially leading to a strong year-end performance for the securitisation market.