RAM Ratings has reaffirmed the AA3/P1 ratings of ORIX Leasing Malaysia Berhad's (ORIX Leasing or the Company) CP/MTN Programme of up to RM500 million, with a positive outlook. Concurrently, we have reaffirmed the ratings of ORIX Leasing's Bank-Guaranteed MTN Programme of up to RM150 million and CP Programme of up to RM150 million at a respective AAA(bg)/Stable and P1. The AAA(bg) rating reflects the irrevocable and unconditional guarantee from Malayan Banking Berhad, rated AAA/Stable/P1 by RAM.
The positive outlook is premised on the better-than-expected improvement in the credit fundamentals of Japan-based ORIX Corporation (ORIX Corp or the Group), which wholly owns ORIX Leasing. ORIX Leasing's ratings are closely linked to ORIX Corp's credit strength given the Company's strategic importance to its parent. As such, we expect a high likelihood of financial support from ORIX Corp if the need arises. Notably, the Group has been demonstrating further improvement in its asset quality with the deleveraging of its real estate exposure progressing ahead of expectations.
Meanwhile, ORIX Leasing's asset quality remains healthy. Its gross impaired-financing (GIF) ratio had eased to 1.3% as at end-March 2015 (2014: 2.0%), aided by write-off on impaired legacy loans. Simultaneously, the Company's credit-cost ratio stood at a low 0.3%, with a robust GIF coverage ratio of 166%. Although there was an uptick in the Company's newly classified impaired loans, we expect its asset quality to hold up, thanks to its prudent credit culture and stringent monitoring procedures. As at end-June 2015, ORIX Leasing's capitalisation stayed strong, with a gearing ratio of 2.3 times.
Liang Huey Jean
(603) 7628 1124
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