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April 9 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has affirmed the National Long-Term IDR and senior bond ratings of PT Sarana Multigriya Financial (Persero) (SMF) at ‘AA (idn)'. The prospect is Stable. Medium-term debt ratings with maturities of 370 days also been affirmed at ‘F1 + (idn)'. A complete list of rankings SMF can be seen at the end of this report.
This affirmation reflects Fitch’s view of the support ekstraordinari of government, at any time if necessary. This support is based on 100% ownership and the role of government policy in developing markets SMF secondary housing in Indonesia. SMF ratings also take into account not the explicit guarantee from the government to those obligations SMF and systemic importance is relatively low compared to the big banks owned by the government.
Factors Fueling Rating
Pressure drop in rankings can occur when there is a perception reduction in the government’s willingness to provide support ekstraordinari the SMF, especially if the mandate of the SMF becomes less crucial to the development of the housing sector, although this is less likely to occur in medium term. The ratings were positive for SMF can be possible if SMF policy role becomes more important systemically and supported by more tangible government support, although this is limited by the size of the SMF smaller than the banks and for greater government the absence of an explicit guarantee from the government.
Fitch hopes that SMF will be able to develop a loan portfolio 1.4 trillion dollars in 2013, which is supported primarily from the issuance of debt. Loans to banks and finance companies grow significantly to 4 trillion rupiah at the end of September 2012 (December 2011: 2.6 trillion), which is caused by the increasing demand for home loan amid the current low interest rates. Bank-bank mortgage lenders also applying stricter lending criteria given in addition to SMF criteria applied by each of the participating banks lending to the debtors, which includes - borrowers are first time home buyers, the ratio loan to value (LTV) maximum of 70%, the ratio of debt to income of 35% and a maximum ceiling per loan is USD 30,000. all loans classified substandard by the end of Septemebr 2012.
The role of developing policies SMF five facilitate securitization top domestic mortgage loan portfolio amounted to 2.96 trillion rupiah BTN in 2009-2012. This is in line with the long-term plan to develop the SMF its role as a provider of credit insurance for institutions giving or securitization of mortgage loans issued only as a provider of the financing only.
Despite the low cost of borrowing in the market, Fitch expects profitability SMF remain thin due to its role as a provider of long-term financing perumaham primary market for competitive interest rates. profitability SMF is not the main purpose for the public role of SMF.
SMF was established by the government of Indonesia in 2005 and regulated and supervised by the Minister of Finance.
The rating actions are detailed as below:
- National Long-term rating: affirmed at ‘AA (idn)'; Outlook Stable
- National Short-term rating: affirmed at ‘F1 + (idn)’
- Senior Bonds III/2010: affirmed at ‘AA (idn)’
- Senior Sustainable Bond Program 2011: affirmed at ‘AA (idn)’
- Continuing Bonds Phase I 2011: affirmed at ‘AA (idn)’
- Continuing Bonds phase II 2012: affirmed at ‘AA (idn)’
- Letter IV/2012 medium-term debt: affirmed at ‘F1 + (idn)'