TRIS Rating Co., Ltd. said that the ratings of Siam Commercial Leasing PLC (SCBL) and its senior debentures are affirmed at “A-” with “stable” outlook even if the debentureholders consent to amend the terms and conditions of the debentures.
TRIS Rating said, as proposed, SCBL will retain the covenant which requires the debt to equity (D/E) ratio to be below 8 times. However, the amount of total debt used to calculate the ratio will change to exclude debts from its parent, Siam Commercial Bank PLC (SCB). The restrictive covenant to maintain the D/E ratio below 8 times will limit all borrowing and thus limit SCBL’s loan portfolio expansion even if the funding is provided by SCB. SCBL has proposed to amend the definition of debts used to calculate the D/E ratio to exclude debts from SCB in order to fully utilize its exclusive and secure funding source.
SCB’s plan to acquire more SCBL’s shares was accomplished through a voluntary tender offer during 13 March to 28 April 2006. SCB owned 95.3% of SCBL at the end of August 2006. SCB clearly showed its intention to be a universal bank and will use SCBL as its arm to operate the hire purchase business. While SCBL will be able to draw on SCB’s support through SCB’s extensive branch network nationwide and ample supply of funds.
Although SCBL will have higher leverage if SCB supports SCBL’s portfolio expansion with loans to SCBL instead of new equity, the benefits from being a strategic subsidiary of SCB will help offset such a risk. If the debentureholders approve the change in the terms and conditions of the debentures as proposed, the company and issue ratings of SCBL will still be maintained at
“A-/Stable”, said TRIS Rating. -- End
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Copyright 2006, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
TRIS Rating said, as proposed, SCBL will retain the covenant which requires the debt to equity (D/E) ratio to be below 8 times. However, the amount of total debt used to calculate the ratio will change to exclude debts from its parent, Siam Commercial Bank PLC (SCB). The restrictive covenant to maintain the D/E ratio below 8 times will limit all borrowing and thus limit SCBL’s loan portfolio expansion even if the funding is provided by SCB. SCBL has proposed to amend the definition of debts used to calculate the D/E ratio to exclude debts from SCB in order to fully utilize its exclusive and secure funding source.
SCB’s plan to acquire more SCBL’s shares was accomplished through a voluntary tender offer during 13 March to 28 April 2006. SCB owned 95.3% of SCBL at the end of August 2006. SCB clearly showed its intention to be a universal bank and will use SCBL as its arm to operate the hire purchase business. While SCBL will be able to draw on SCB’s support through SCB’s extensive branch network nationwide and ample supply of funds.
Although SCBL will have higher leverage if SCB supports SCBL’s portfolio expansion with loans to SCBL instead of new equity, the benefits from being a strategic subsidiary of SCB will help offset such a risk. If the debentureholders approve the change in the terms and conditions of the debentures as proposed, the company and issue ratings of SCBL will still be maintained at
“A-/Stable”, said TRIS Rating. -- End
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Copyright 2006, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.