Philippine Rating Services Corporation (PhilRatings) announces that it has assigned a PRS 2 Plus rating to BDO Leasing & Finance, Inc.’s (BDOLF) proposed P4 Billion short-term commercial papers (STCPs). The rating means that BDOLF has above average (strong) capability for payment of the commercial paper issue on both interest and principal.
A PRS 2 Plus rating is the second highest rating level on the PhilRatings short-term credit rating scale. A PRS 2 Plus-rated issue is normally evidenced by many characteristics of a PRS 1 rating but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variations. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. The rating reflects BDOLF’s solid market position, sound capitalization, synergies with its parent company (Banco de Oro Unibank, Inc. or BDO), and sustained albeit tempered profitability. BDOLF continues to be a major player in the country’s leasing and financing industry. Capitalization is sound, supported by the company’s large equity base and conservative leverage.
BDO Leasing & Finance, Inc.’s equity, which stood at P4 Billion as at end-2007, is the biggest in the industry. Debt usage is expected to remain prudent, with projected debt to equity ratio to remain nearly unchanged from previous years. BDOLF is seen to remain an important subsidiary of its parent-bank, and is able to gain name recognition and marketing referrals via BDO’s extensive branch network. Despite growth in revenues and net income for 2007, profit margins declined because of higher interest charges and provision for credit losses. Profitability measures for interim September 2008, however, have shown improvement. BDOLF appears on track to meet its income targets for this year, which already reflect the generally cautious outlook for the leasing and finance industry.
PhilRatings is the pioneer domestic credit rating agency in the Philippines and is accredited by both the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP). PhilRatings commissioned the Institute for Development and Econometric Analysis, Inc. (IDEA), a research firm, to review of its historical rating record and performance from 1993 to 2006. Based on the results of the study, there is “a general picture of stability and reliability in terms of ratings assigned to issues and issuers. Issues given higher credit ratings have a greater probability of remaining in the same rating category and have a lower probability of default than lower-rated ones.
Furthermore, Philippine Rating Services Corporation (PhilRatings) is also a founding member of the Association of Credit Rating Agencies in Asia (ACRAA), which now counts twenty-five (25) domestic credit rating agencies in the Asian region as its members.
For credit & collection (C&C) questions, comments and rejoinders you want to share or inquire, you can reach him at 0917-7220521 or at elimtingco@cibi.net.ph