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Key Points

India has achieved a significant milestone in financial innovation with the first mortgage-backed Pass-Through Certificates listed on the National Stock Exchange. The Rs 1,000 crore offering by LIC Housing Finance represents a breakthrough in securitization and debt market development. These AAA-rated instruments carry a 7.26% coupon rate and have a 20-year tenure, demonstrating strong investor confidence. The listing highlights the government's commitment to expanding housing finance and creating more sophisticated investment instruments in India's financial ecosystem.

Key Points: India's First AAA Mortgage-Backed Securities Hit NSE

  • First mortgage-backed PTCs listed on NSE
  • Fully subscribed Rs 1,000 crore offering
  • AAA rated securities with 20-year tenure
  • Coupon rate discovered through electronic platform
2 min read

India's 1st mortgage-backed pass-through certificates listed on NSE

LIC Housing Finance launches groundbreaking Rs 1,000 crore Pass-Through Certificates with 7.26% coupon rate on NSE

"Securitisation can serve as a bridge between housing finance and debt markets - M. Nagaraju, Finance Department Secretary"

Mumbai, May 5

In a major development for India's housing finance and debt markets, the country’s first mortgage-backed Pass-Through Certificates (PTCs) were officially listed on the National Stock Exchange (NSE) on Monday.

These PTCs have been structured by RMBS Development Company Limited and are backed by a pool of housing loans originated by LIC Housing Finance Limited.

The issue size stood at Rs 1,000 crore, comprising 1,00,000 PTCs with a face value of Rs 1,00,000 each. The offering was fully subscribed, reflecting strong investor interest.

This landmark issuance is also the first of its kind in India, where the coupon rate was discovered through the Electronic Book Provider (EBP) platform of the NSE.

The final coupon was set at 7.26 per cent per annum, and the instruments have a tenure of nearly 20 years.

The PTCs carry a top-tier AAA(SO) rating from both CRISIL and CARE Ratings, and are issued in dematerialised form, making them tradable on the secondary market.

The listing was carried out by M. Nagaraju, Secretary, Department of Financial Services, Ministry of Finance, who marked the occasion by ringing the ceremonial bell.

In his remarks at the event, Nagaraju highlighted the crucial role of the housing and housing finance sectors in the broader economic landscape.

He noted that housing has deep linkages with other industries, including infrastructure, and emphasised the urgent need to meet the country’s growing housing demand to support overall economic growth.

He further added that securitisation, through instruments like these PTCs, can serve as a bridge between the housing finance market and the broader debt market.

Stressing the importance of Residential Mortgage-Backed Securities (RMBS), Nagaraju said such instruments could be a game-changer for boosting liquidity and supporting the growth of the housing finance ecosystem in India.

The listing ceremony was attended by several top officials from banks, housing finance companies, and other financial institutions, marking a significant step toward deepening the securitisation market and broadening investment opportunities in the country.

- IANS

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Reader Comments

R
Rajesh K.
This is a fantastic move for our housing sector! Finally, middle-class investors like me can participate in real estate growth without buying property directly. The 7.26% coupon is attractive compared to FDs. Hope more such instruments come soon. 🇮🇳
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Priya M.
While I appreciate the innovation, 20 years is too long a tenure for retail investors. Most Indians prefer 5-10 year investments. Also, how will liquidity be ensured in secondary market? Need simpler options for common people.
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Amit S.
As a finance professional, I see this as India catching up with global markets. The AAA rating gives confidence, but we need more transparency about the underlying loan quality. Hope this becomes as big as corporate bonds market!
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Neha T.
Great initiative but will it really help affordable housing? Most housing loans in pool are probably for high-value properties. Should have some quota for lower income groups too. Otherwise it's just another tool for rich investors.
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Vikram J.
Finally some diversification beyond mutual funds and stocks! The demat format is good, but SEBI should ensure proper investor education. Many retail investors might not understand the risks involved in such complex instruments.
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Sanjay R.
Good to see LIC Housing involved - gives it credibility. But remember 2008 US housing crisis was caused by similar instruments. RBI must keep strict oversight on loan quality. Jai Hind! 🚩

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