Fitch upgrades indonesias bca finance to aaa(idn); outlook stable

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(The following statement was released by the rating agency) JAKARTA/SEOUL/SINGAPORE, May 22 (Fitch) Fitch Ratings has upgraded Indonesia-based PT BCA Finance's (BCAF) National Long-Term rating to 'AAA(idn)' from 'AA+(idn)' with a Stable Outlook. Fitch has also upgraded BCAF's rupiah-denominated senior bond III/2010, IV/2011, tranche I/2012 bonds and bond issuance programme I/2012 to 'AAA(idn)' from 'AA+(idn)' and affirmed its National Short-Term rating at 'F1+(idn)' and subordinated bond I/2010 at 'AA-(idn)'. The agency has assigned a National Long-Term Rating of 'AAA(idn)' and a National Short-Term rating of 'F1+(idn)' to BCAF's proposed senior bond tranche II 2013, to be issued under the programme, of up to IDR1.8trn with a maturity of up to four years. The proceeds from the proposed issue will be used to support the company's business growth. The upgrade of BCAF's National Long-Term Rating reflects Fitch's reassessment of the support from and linkage with its shareholder, PT Bank Central Asia Tbk (BCA; 'AAA(idn)'/Stable), according to Fitch's criteria. Key Rating Drivers - National Ratings and Debt BCAF's ratings reflect Fitch's expectation of a strong probability of parent support in times of need. The ratings also take into account BCAF's increasing strategic importance to its parent as a growing core subsidiary to support BCA's business expansion in Indonesia's fast-growing consumer financing market as well as expected improvements in the regulatory framework for multifinance companies. As an integral part of BCA's consumer business chain, BCAF has an important role in managing BCA's entire portfolio of vehicle loans. The auto loan portfolio grew 5x in as many years to represent a significant 35% of total BCA's consumer loans at end-March 2013. BCA's support is manifested in the common brand name it shares with BCAF, the provision of funding and operational alignment. The Stable Outlook reflects Fitch's expectations that BCA will continue to support BCAF in case of need. Rating Sensitivities - National Ratings Any significant decline in BCA's ownership and performance or support and BCAF's contribution to BCA would exert downward pressure on its ratings. However, Fitch sees this prospect as remote in the foreseeable future, given BCAF's importance to BCA's consumer business. There is no rating upside as the rating is already at the top of the scale. Rating Sensitivities - Debt Ratings The senior bonds and bond programme are rated at the same level as the company's National Long- and Short-Term Ratings as they constitute direct, unsubordinated and senior unsecured obligations of the company and rank equally with all its other unsecured and unsubordinated obligations. Any changes in the company's National Long- and Short-Term Ratings would affect these issue ratings. The subordinated debt is rated three notches below BCAF's National Long-Term Rating to reflect their subordination status and at the same level as a similar instrument of BCA, but not higher. Fitch assesses coupon deferral risk to be present for all Lower Tier 2 securities issued by BCAF, including even those with no coupon deferral features in the original term sheets. It is Fitch's view that in the event of troubled Indonesian banks falling under "intensive surveillance" the banks, together with their finance companies, would not be allowed to pay coupons on their Lower Tier 2 securities, which is a form of non-performance risk. Contacts: Primary Analyst Julita Wikana Director +62 21 2902 6405 PT Fitch Ratings Indonesia Level 20 Prudential Tower Jl. Jend. Sudirman Kav.79 Jakarta, Indonesia 12910 Secondary Analyst Iwan Wisaksana Director +62 21 2902 6406 Committee Chairperson Jonathan Lee Senior Director +886 2 8175 7601 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.this site 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. Specific letter grades are not therefore internationally comparable. Additional information is available at this site Applicable criteria, "Global Financial Institutions Rating Criteria", dated 15 August 2012, "Finance and Leasing Companies Ratings Criteria", dated 12 December 2012, "Assessing and Rating Bank Subordinated and Hybrid Securities", dated 5 December 2012, "Rating FI Subsidiaries and Holding Companies", dated 10 August 2012, and "National Ratings Criteria", dated 19 January 2011, are available at this site Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Finance and Leasing Companies Criteria here Assessing and Rating Bank Subordinated and Hybrid Securities here Rating FI Subsidiaries and Holding Companies here National Ratings Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. 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