TEXT-Fitch affirms Tunisie Leasing ratings at 'BBB+(tun)'
Aug 2 - Fitch Ratings has affirmed Tunisie Leasing's (TL) National Long-term rating at 'BBB+(tun)' and Short-term rating at 'F2(tun)'. The Outlook on the National Long-term rating is Stable. A full list of rating actions is at the end of this comment. RATING DRIVERS TL's ratings reflect its acceptable asset quality and advanced risk management compared to its peers and satisfactory profitability. They also factor in TL's fragile liquidity. TL's funding profile is significantly geared towards bond issuance and the company's liquidity is consequently constrained when turbulence occurs in this small market. Although TL regained access to the Tunisian bond market in Q311, liquidity tensions persist, mirrored by higher refinancing costs. In addition, TL's liquidity buffer, consisting of committed undrawn credit lines, remains limited compared to its ambitious annual funding requirements. Nonetheless, Fitch considers TL's main shareholder, Amen Bank, could somewhat increase its funding contribution to its subsidiary. TL's asset quality, although under pressure, remains acceptable and better than that of the sector average. Fitch considers that TL's well managed risk management compared to peers is likely to prevent severe asset quality deterioration. TL's resilient profitability is supported by strong revenues generated by its Algerian leasing subsidiary, Maghreb Leasing Algerie. TL's profitability in its Tunisian market in 2011 was hampered by significant loan impairment charges and lower lending volumes, but Fitch considers TL will be able to deliver satisfactory profitability in 2012 given the improved -albeit still fragile- operating environment. Nonetheless, if there was more severe liquidity stress in Tunisia's bond market and banking system, TL would have to limit its new loan volumes. Fitch considers TL's capital base to be adequate given its risk profile and conservative risk management. SENSITIVITIES Fitch considers that a severe deterioration of TL's access to liquidity, notably constraints to tap the Tunisian bond market, would likely lead to downgrade of its ratings. A similar rating action could be taken in case of weakening asset quality, with significant impact on its profitability and capital. Upside potential of TL's ratings is limited by its fragile liquidity. The rating actions are as follows: National Long-term rating: affirmed at 'BBB+(tun)'; Stable Outlook National Short-term rating: affirmed at 'F2(tun)'; Stable Outlook National senior unsecured debt rating: affirmed at 'BBB+(tun)' National subordinated debt rating: affirmed at 'BB+(tun) Additional information is available on www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable criteria, 'Global Financial Institutions Rating Criteria, dated 16 August 2011', 'Finance and Leasing Companies Criteria', dated 12 December 2011, 'National Ratings-Methodology Update', dated 19 January 2011, 'Evaluating Corporate Governance', date 13 December 2011 and 'Recovery Ratings for Financial Institutions' dated 16 August 2011 are available at www.fitchratings.com. Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(tun)' for National ratings in Tunisia. Specific letter grades are not therefore internationally comparable. Applicable Criteria and Related Research: Recovery Ratings for Financial Institutions Global Financial Institutions Rating Criteria Finance and Leasing Companies Criteria Evaluating Corporate Governance
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