November 30, 2017 / 11:31 AM / a year ago

Fitch Affirms Ratings on 4 of Astra's Finance Subsidiaries

(The following statement was released by the rating agency) JAKARTA, November 30 (Fitch) Fitch Ratings has affirmed PT Astra Sedaya Finance (ASF) Long-Term Issuer Default Rating (IDR) at 'BBB-' and Short-Term IDR at 'F3'. At the same time, Fitch Ratings Indonesia has affirmed the National Ratings on ASF and three other multi-finance subsidiaries of PT Astra International Tbk as follows: - ASF: 'AAA(idn)' and 'F1+(idn)' - PT Federal International Finance (FIF): 'AAA(idn)' and 'F1+(idn)' - PT Surya Artha Nusantara Finance (SANF): 'AA(idn)' and 'F1+(idn)' - PT Toyota Astra Financial (TAF): 'AAA(idn)' and 'F1+(idn)' The Outlooks are Stable. A full list of rating actions is provided at the end of this commentary. 'AAA' National Ratings denote the highest rating assigned by Fitch on its national rating scale for that country. This rating is assigned to issuers or obligations with the lowest expectation of default risk relative to all other issuers or obligations in the same country. 'AA' National Ratings denote expectations of very low default risk relative to other issuers or obligations in the same country. The default risk inherently differs slightly from that of the country's highest rated issuers or obligations. 'F1' Short-Term National Ratings indicate the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. On Fitch's National Rating scale, this rating is assigned to the lowest default risk relative to others in the same country. Where the liquidity profile is particularly strong, a "+" is added to the assigned rating. KEY RATING DRIVERS The rating affirmations on ASF, FIF and SANF reflect Fitch's expectation that the companies will continue to benefit from strong support and commitment from their majority shareholder, Astra International, which is one of Indonesia's largest companies by market capitalisation, and dominates the country's automotive and heavy equipment sectors. Astra International is 50.1% owned by Jardine Cycle & Carriage Ltd, which is part of the Jardine Matheson Group. The Stable Outlooks reflect Fitch's expectations that Astra International will continue to support ASF, FIF and SANF if required. Both ASF and FIF are majority-owned by Astra International (ASF: 86.1%, FIF: 99.9%) and significantly contribute to expanding the latter's car and motorcycle manufacturing and distributor business in Indonesia. ASF provides direct financing services for Astra International's car sales while FIF provides direct financing services for the purchase of Honda motorcycles produced by Astra Honda Motor, a 50-50 joint venture between Astra International and Honda Motor Co., Ltd (A/Stable). SANF's ratings take into account its lower importance to the Astra Group. SANF - 60% owned by Astra International - provides financing services to companies that buy heavy equipment from PT United Tractors Tbk, the Astra Group's heavy equipment distribution subsidiary in Indonesia. However, SANF's importance to Astra International, in Fitch's view, is limited and not as strong as that of ASF and FIF, as the heavy equipment business's contribution to the Astra Group's overall franchise is less than the automotive segment. The affirmation of TAF's ratings reflects its strong support from Toyota Financial Services Corporation (TFSC), one of its two major shareholders and a wholly owned subsidiary of Toyota Motor Corporation (A/Stable), one of the largest automotive manufacturers in the world. As part of the Toyota group, TAF benefits from product knowledge and funding support. The latter is derived from Toyota Motor's strong relationship with Japanese banks and Japanese government-backed financial institutions. TAF also benefits from support from Astra International, the other major shareholder, particularly in dealership networks. Astra International is a leading car distributor in Indonesia and holds exclusive rights to sell Toyota vehicles in the country. The Stable Outlook reflects Fitch's expectations that Toyota Motor and Astra International will continue to support TAF if needed. DEBT RATINGS The bonds and debt programmes of the four subsidiaries are rated at the same level as the issuers' National Long-Term and Short-Term Ratings. ASF's foreign-currency notes are rated at the same level as its Long-Term IDR. RATING SENSITIVITIES IDRS, NATIONAL RATINGS AND SENIOR DEBT A significant drop in contribution from ASF, FIF and SANF to Astra International in terms of credit sales could result in negative rating action. A notable decline in Astra International's ownership or significant increase of management independence would also exert downward pressure on the ratings of ASF, FIF and SANF, although Fitch considers this prospect to be remote in the foreseeable future, given the importance of ASF to the parent's car business, FIF to Astra Honda Motor's motorcycle business, and SANF to the parent's heavy equipment business. The ratings on ASF, FIF and SANF are also sensitive to changes in Astra International's credit profile, which Fitch views as better than those of its subsidiaries; any significant change to the parent would be likely to lead to a review of the subsidiaries' ratings. Any decline in Toyota Motor's ownership would exert downward pressure on TAF's ratings, as would a decline in support from both shareholders. However, Fitch sees this prospect as remote in the foreseeable future, given TAF's strategic role in financing purchases of Toyota cars. There is no rating upside for the national ratings of ASF, FIF and TAF as they are rated at the highest point on the national scale. For SANF, a significant increase of its strategic importance to Astra International - likely caused by higher ownership by Astra International, and common group branding or a significant increase in SANF's contribution to Astra International in growing the group's franchise - may result in positive rating action. However, a change in the issuers' creditworthiness relative to the universe of issuers within Indonesia, including the Indonesian sovereign, would lead to a change in their National ratings. DEBT RATINGS Any changes in the issuers' international and National Ratings would affect the issue ratings. The rating actions are as follows: ASF Long-Term IDR affirmed at 'BBB-'; Outlook Stable Short-Term IDR affirmed at 'F3' National Long-Term Rating affirmed at 'AAA(idn)'; Outlook Stable National Short-Term Rating affirmed at 'F1+(idn)' Senior unsecured medium-term note ratings affirmed at 'BBB-' Rupiah senior unsecured bond programme and tranches under the programme affirmed at 'AAA(idn)' and 'F1+(idn)' FIF National Long-Term Rating affirmed at 'AAA(idn)'; Outlook Stable National Short-Term Rating affirmed at 'F1+(idn)' Rupiah senior unsecured bond programme and tranches under the programme affirmed at 'AAA(idn)' SANF National Long-Term Rating affirmed at 'AA(idn)'; Outlook Stable National Short-Term Rating affirmed at 'F1+(idn)' Rupiah senior unsecured bond programme and tranches under the programme affirmed at 'AA(idn)' TAF National Long-Term Rating affirmed at 'AAA(idn)'; Outlook Stable National Short-Term Rating affirmed at 'F1+(idn)' Rupiah senior unsecured bond programme and tranches under the programme affirmed at 'AAA(idn)' and 'F1+(idn)' Contacts: Primary Analysts Ambreesh Srivastava (International Ratings for ASF) Senior Director +65 6796 7218 Fitch Ratings Singapore Pte Ltd One Raffles Quay, South Tower #22-11 Singapore 048583 Syaiful Adrian, CFA (National Ratings for ASF) Associate Director +62 21 2988 8610 PT Fitch Ratings Indonesia DBS Bank Tower Level 24 Jl. Prof. Dr. Satrio Kav.3-5 Jakarta, Indonesia 12910 Priscilla Tjitra (National Ratings for FIF) Associate Director +62 21 2988 6809 Gary Hanniffy, CFA (National Ratings for SANF) Director +62 21 2988 6808 Iwan Wisaksana (National Ratings for TAF) Director +62 21 2988 6807 Secondary Analysts Syaiful Adrian, CFA (International Ratings for ASF) Associate Director +62 21 2988 8610 Committee Chairperson Jonathan Lee Senior Director +886 2 8175 7601 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(idn)' for National ratings in Indonesia. 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