TRIS Rating Co., Ltd. has removed the CreditAlert with “negative” implication from EASY BUY PLC’s guaranteed debentures and has assigned the “negative” outlook to the debentures. At the same time, TRIS Rating has affirmed the ratings of EASY BUY’s guaranteed debentures at “AA”, and has affirmed the company rating of EASY BUY at “BBB” with a “negative” outlook.
TRIS Rating said that the company rating reflects EASY BUY’s strong market position in Thailand’s non-bank consumer finance businesses and strong supports from its parent and major shareholders. The rating is constrained by EASY BUY’s low capitalization and its customers’ credit sensitivity to an unfavourable economic, and operating environment, which might limit the company’s business growth and profitability, and deteriorate asset quality.
The issue ratings reflect a full guarantee by EASY BUY’s parent company, ACOM Co., Ltd., a company rated “A3” with a “negative” outlook by Moody’s Investors Service (Moody’s) and “BBB+” with a “negative” outlook by Standard & Poor’s (S&P). ACOM’s ratings are supported by its strong market position in the consumer finance business, a sound and experienced management team, more diversified businesses, and strong alliance with Mitsubishi-UFJ Financial Group Inc. (MUFG). MUFG currently holds a 40.04% stake in ACOM and has included ACOM as its consolidated subsidiary since 25 December 2008. These strengths are constrained by a fiercely competitive environment and regulatory risk, which negatively affect the performance of non-bank consumer finance companies in Japan.
The “negative” outlook for the company rating of EASY BUY reflects the expectation that the company’s financial performance will likely be impacted by unfavourable operating environment, and the company still has low capital base to absorb downside risk from adverse changes in the operating climate. To maintain the current rating, TRIS Rating expects the company to raise a sizable amount of capital as a cushion for equity deterioration due to unexpected losses in the future. While the “negative” outlook for the issue ratings reflects the remained uncertainty of financial performance of ACOM, the guarantor, in FY2010 which is highly pressured by higher provisioning expenses for both possible loan losses and refunds of overpaid interests, said TRIS Rating. -- End
Company Rating: Affirmed at BBB Rating Outlook: Negative Issue Ratings: EB108A: Bt320 million guaranteed debentures due 2010 Affirmed at AA EB108B: Bt100 million guaranteed debentures due 2010 Affirmed at AA EB128A: Bt125 million guaranteed debentures due 2012 Affirmed at AA EB128B: Bt2,710 million guaranteed debentures due 2012 Affirmed at AA Up to Bt5,000 million guaranteed debentures due within 2012 Affirmed at AA Rating Outlook: Negative
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