(The following was released by the rating agency)
JAKARTA/SEOUL/SINGAPORE, February 18 (Fitch) Fitch Ratings
has affirmed PT Surya Artha Nusantara Finance's (SANF) National
Long-Term Rating at 'AA(idn)' with Stable Outlook and National
Short-Term rating at 'F1+(idn)'. A complete list of rating
actions is included at the end of this commentary.
Rating Action Rationale
SANF's ratings reflect Fitch's expectation of continued
strong support and commitment from its majority shareholder, PT
Astra Internasional Tbk (AI). The ratings also take into account
SANF's strategic importance to the Astra Group as a financing
arm in expanding the latter's heavy equipment distributor
business in Indonesia through its subsidiary, PT United Tractors
Tbk. The Stable Outlook reflects Fitch's expectations that AI
will continue to support SANF in case of need.
Rating Drivers and Sensitivities
Any weakening in the propensity of support from AI would
have an impact on SANF's National ratings, as would significant
changes in AI's financial performance. However, Fitch believes
it is unlikely that AI's willingness to support will diminish in
the foreseeable future, given SANF's strategic role in AI's
heavy equipment business. On the other hand, a notable increase
of SANF's strategic importance to AI, likely to be manifested by
in higher AI ownership, common group branding, or a significant
increase in SANF's financial contribution to AI, may result in a
positive rating action.
A challenging global economic outlook with weakening prices
in mining and commodities - sectors to which SANF is exposed -
and strong loan growth in the past two years could weaken SANF's
asset quality in 2013. Loans overdue for 1-60 days rose to 28%
of total receivables in 9M12 (2011: 12%), which could lead to
higher non-performing loans in a difficult economic environment.
Fitch believes the likely deterioration in asset quality should,
nevertheless, be manageable, given the company's strong credit
Overall SANF's satisfactory underlying profitability with a
return on assets of 3.8% at end-Q312 (2011: 3.6%), combined with
a higher provision cover at 3.6% of total net managed
receivables at end-Q312 (2011: 2.4%), should continue to provide
reasonable buffer against loan losses in more challenging
SANF was established in 1983 by Astra Group focusing on the
heavy equipment leasing business. It is owned by AI (60%) and
Marubeni Group (40%).
The details of all rating actions are:
- National Long-Term Rating affirmed at 'AA(idn)'; Stable
- National Short-Term Rating affirmed at 'F1+(idn)'
- National Long-Term rupiah senior bond II affirmed at
- National Long-Term rupiah medium term notes IV affirmed at
- National Short-Term rupiah medium term notes IV affirmed