(The following statement was released by the rating agency)
Jan 11 - Fitch Ratings has assigned Taiwan's Chailease Finance Co. Ltd. (Chailease) a
Long-Term Foreign Currency Issuer Default Rating (IDR) of 'BBB-' with Stable Outlook. A full
rating list is detailed at the end of this commentary.
Chailease's ratings reflect its dominant franchise in leasing/instalment finance
in Taiwan, resilient business model with a long operating history and reasonable
balance sheet strength. Despite its small asset size, its balance sheet strength
and earnings performance are generally comparable to global peers. The ratings
are constrained by potential risks to growth in China and its reliance on
wholesale funding, which is sensitive to investor sentiment. The latter,
however, is partly mitigated by the company's liquidity management and efforts
to diversify into capital markets and its diverse investor base (e.g. insurance
companies, bond funds).
The Stable Outlook underlines Fitch's expectation that the company will maintain
its adequate capitalization and enforce risk governance while pursuing
aggressive growth. Rating upgrade is unlikely in the near- to medium-term as the
company is constrained by its small size by global peer comparison. Negative
rating drivers would be significant deterioration in Chailease's and/or the
group's (Chailease Holding Company Ltd. (Cayman) or Chailease Holdco ) credit
profiles, including asset quality and capitalisation/leverage, arising from its
growth strategy, particularly in China, or from a weaker economic outlook.
Established in 1977 and merged with CITC Company in 1995, Chailease is the
largest leasing company in Taiwan with an around 45% market share. It mainly
provides leasing and instalment finance to SMEs for their purchase of raw
materials, machinery, equipment, etc. Chailease is fully owned by and the
principal subsidiary of Chailease Holdco, which was created in 2009 and was
listed in Taiwan in December 2011. Andre Koo and his allies collectively
controlled a majority stake in Chailease Holdco and four out of nine board
seats. Chailease's geographical coverage includes its home market in Taiwan and
a moderate portfolio in Thailand, Vietnam and the U.S. Chailease Holdco has a
growing presence in China.
Fitch has assigned the following ratings to Taiwan's Chailease:
Long-Term Foreign Currency IDR: 'BBB-'; Outlook Stable
Short-Term Foreign Currency IDR: 'F3'
National Long-Term rating: 'A(twn)'; Outlook Stable
National Short-Term rating: 'F1(twn)'