TRIS Rating affirms the company rating on Ayudhya Capital Auto Lease PLC (AYCAL) and the ratings on its outstanding senior unsecured debentures at “AA+” with a “stable” rating outlook. At the same time, TRIS Rating assigns the rating on AYCAL’s proposed issue of up to Bt3 billion in senior unsecured debentures at “AA+”. The proceeds from the new debentures will be used for loan repayment and business expansion.
The ratings take into consideration the business support and financial support AYCAL receives from Bank of Ayudhya PLC (BAY), rated “AAA” with a “stable” rating outlook by TRIS Rating. The ratings of AYCAL are enhanced from its stand-alone rating as TRIS Rating holds the view that the company is a highly strategic subsidiary of BAY.
The ratings on a standalone basis reflects the company’s solid market position as the leading operator of motorcycle hire purchase loans, strong capital base, ample liquidity, and well managed asset quality. However, the strengths are weighed down moderately by concerns over intense competition, which may pressure loan yield, and a potential rise in credit risk due to the weakening economy.
RATING OUTLOOK
The “stable” rating outlook reflects our expectation that AYCAL’s business direction will remain closely aligned with BAY’s strategy. The outlook assumes that AYCAL will continue to receive a high level of support from its parent bank. The outlook also considers the ability of the management team to maintain AYCAL’s strong market position as a leading motorcycle hire purchase lender. TRIS Rating also expects AYCAL’s profitability and capital base will stay strong enough to serve as cushions against any downside risks in the motorcycle hire purchase business.
RATING SENSITIVITIES
The ratings and/or outlook could be uplifted if AYCAL’s status to the Group further improves, which is highly unlikely in the foreseeable future. In contrast, the rating/outlook could be revised down should BAY’s rating/outlook is downgraded, or TRIS Rating takes the views that AYCAL’s status to the BAY Group has weakened.
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