The threat of the newly discovered Omicron variant of Covid-19 may once again make investors cautious when purchasing retail pools created by non-bank financial companies (NBFCs) and housing finance companies (HFCs) by the through direct sales and securitization transactions, Icra said in a statement. report. “The spread of the virus could reignite concerns about state or country-wide lockdowns that would impact the loan collection capacities of NBFCs and HFCs,” he said.
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The agency, which previously estimated that securitization volumes (including direct sales) would increase by up to 40% to reach 1.2 lakh crore in FY22, with around 60-70% of the volumes generated during of the second half of the year, said securitization volumes could be severely affected for the remainder of the year as investors would rather wait for the threat to subside.
“Volumes still only represent around 40% of the pe-Covid period. The increase in Covid-19 infections in April and May 2021 weighed on securitization volumes for some time. The threat of the spread of the Omicron variant is again a sign of concern. “Said its head of structured finance ratings, Abhishek Dafria.
If concern around the Omicron variant increases, unsecured loan financiers would be the hardest hit in the securitization market, as borrowers have a higher likelihood of defaulting on an unsecured loan during periods of time. economic crisis, he added.