January 10, 2013 / 9:20 AM / 5 years ago

TEXT-Fitch Raise BFI Finance to 'A + (idn)'; outlook Stable

(The following statement was released by the rating agency)

Jan 10 - Fitch Ratings has upgraded the rating of National Long-Term PT BFI Finance Indonesia Tbk (BFI Finance) to 'A + (idn)' from 'A (idn)'. Stable prospects

Fitch has also upgraded the rating-ranking bonds and bond program dollars 575 billion rupiah number issued under the MTN program and a 225 billion rupiah were also raised to 'A + (idn)' from 'A (idn)'. Fitch also assigned a rating 'A + (idn) for phase II rupiah bonds with maturities up to 3-year bonds issued under the same program.

The ratings reflect the company's capital continued to strengthen with a low level of debt. Improvements that consistently produces great liquidity and profitability are better than its competitors. Rating also recognizes that asset quality is quite good although slightly weaker in Q312. The existence of a significant weakening of the positive factors above will lead to negative pressure on the rating.

The increase in this ranking makes the BFI Finance as an independent multi-finance companies with the highest standalone ratings when compared to local competitors. But the outlook for the next rank increases are limited due to the limited network and also its dependence on wholesale funding that led to the potential higher liquidity risk than banks.

BFI Finance recorded a healthy profit at the end of Q312 despite the new regulations for consumer finance industry in 2012. Debt levels remain low at 1.3x compared to the average competitor at 4.3x in H112. Liquidity remains satisfactory with asset liability well-managed. Companies also gain the advantage with the financial support of the majority shareholder, which is Trinugraha fund management company owned by TPG Capital, which is also the largest shareholder in the Bank BTPN. BFI Finance has unused credit facilities amounting to 370 billion of BTPN in Q312 (33% of the total unused credit facilities).

Fitch believes that the asset quality of the company will be under pressure in the short-medium term due to the demand for equipment funding in the commodity sector, which ranges from about 20% of the total portfolio, remained weak in 2013. However, deterioration in asset quality under control given the company should have the highest capital level in this industry. BFI Finance also established a new unit to improve the management of credit risk and operational risk control.

Founded in 1982, BFI Business Finance focuses on leasing / factoring and consumer financing in Java, Sumatra, Kalimantan and areas in eastern Indonesia. The company is owned by leading international fund management companies, including Trinugraha Capital (44.95%) and the Northern Trus S / A AVGC (8:30%).

(Bangalore Ratings Team, Hotline:+91 80 4135 5898 Jyothsna.BN@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: Jyothsna.BN.thomsonreuters.com@reuters.net))

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