Thai Rating and Information Services Co., Ltd. (TRIS) announced Friday 27 April 2001 that it has assigned a "BBB+" rating to Siam Panich Leasing PLC's (SPL) Bt3,500 million senior debentures. The rating is based on SPL's sound operating results, strong financial support from its major shareholder -- Siam Commercial Bank (SCB), and its sustained and solid relationships with automobile manufacturers and dealers. The rating also takes into consideration SPL's good asset quality, which has led to a low level of delinquent accounts, its efficient internal control system, as well as its improving financial performance. However, fierce competition in the hire purchase business coming from foreign heavyweights is a major concern for TRIS.
TRIS reported that SPL manages its loan portfolio quite efficiently, resulting in a low level of non-accrual loans, on average 5% of average loans at the end of 2000. SPL classifies a loan as non-accruing at four-months past due for the hire purchase loans and six-months past due for leasing and factoring loans. The level of non-accrual loans slightly increases to 5.1% if the Bank of Thailand's three-months past due criterion is used. This is still much lower than 24.5% of non-accrual loans to outstanding loans of finance companies. SPL's hire purchase business, which accounted for 86% of its total lending portfolio, reported only 1% non-accrual loans at the end of 2000. This high asset quality allows the company to set an allowance for loan losses at a low 4% of its total lending portfolio. At the end of 2000, the company's net spread was 4.9%, higher than its target.
Despite the closure of many financial institutions during the crisis period, the environment of the hire purchase industry remains today highly competitive. As a strategy to expand their market share, foreign financial institutions are cutting lending rates, which is putting pressure on domestic players. Foreign players have some competitive advantages over Thai operators, because huge funding support from parent companies which enhances their financial flexibility. The cost of funds for these foreign players, which have tapped local sources of funds, is currently lower than for domestic players. They are also far advanced in implementing modern technologies.
SPL lowered its capital costs by issuing debentures in early 2000 to refinance high-interest rate loans from SCB and other financial institutions. As of 31 December 2000, SPL had credit facilities available from many financial institutions amounting to Bt5,479 million and unutilized credit lines worth Bt646 million. Foreign debts, which hurt the company's bottom line earlier because of exchange rate fluctuations, have now been fully hedged. These foreign debts will mature in 2001. For the period ending Q4/2000, SPL reported a satisfactory equity-to-total asset ratio at 27.5%, a level which is better than the average of finance companies at 20.2%.
Siam Panich Leasing PLC (SPL) Issue Rating SPL#2: Bt3,500 million senior debentures due 2005 BBB+
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TRIS reported that SPL manages its loan portfolio quite efficiently, resulting in a low level of non-accrual loans, on average 5% of average loans at the end of 2000. SPL classifies a loan as non-accruing at four-months past due for the hire purchase loans and six-months past due for leasing and factoring loans. The level of non-accrual loans slightly increases to 5.1% if the Bank of Thailand's three-months past due criterion is used. This is still much lower than 24.5% of non-accrual loans to outstanding loans of finance companies. SPL's hire purchase business, which accounted for 86% of its total lending portfolio, reported only 1% non-accrual loans at the end of 2000. This high asset quality allows the company to set an allowance for loan losses at a low 4% of its total lending portfolio. At the end of 2000, the company's net spread was 4.9%, higher than its target.
Despite the closure of many financial institutions during the crisis period, the environment of the hire purchase industry remains today highly competitive. As a strategy to expand their market share, foreign financial institutions are cutting lending rates, which is putting pressure on domestic players. Foreign players have some competitive advantages over Thai operators, because huge funding support from parent companies which enhances their financial flexibility. The cost of funds for these foreign players, which have tapped local sources of funds, is currently lower than for domestic players. They are also far advanced in implementing modern technologies.
SPL lowered its capital costs by issuing debentures in early 2000 to refinance high-interest rate loans from SCB and other financial institutions. As of 31 December 2000, SPL had credit facilities available from many financial institutions amounting to Bt5,479 million and unutilized credit lines worth Bt646 million. Foreign debts, which hurt the company's bottom line earlier because of exchange rate fluctuations, have now been fully hedged. These foreign debts will mature in 2001. For the period ending Q4/2000, SPL reported a satisfactory equity-to-total asset ratio at 27.5%, a level which is better than the average of finance companies at 20.2%.
Siam Panich Leasing PLC (SPL) Issue Rating SPL#2: Bt3,500 million senior debentures due 2005 BBB+
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