Bangkok--Dec 1--Fitch Ratings
Fitch Ratings (Thailand) has today assigned a National rating of ‘AA+(tha)’ to Primus Leasing Company Limited’s (“Primus”) THB500 million five-year guaranteed notes issued under the company’s medium-term note (MTN) programme. At the same time, the agency also affirmed the National ratings of Primus’ guaranteed notes under the previous MTN programmes and the guaranteed bills of exchange at ‘AA+(tha)’. The National ratings are based on the full, irrevocable and unconditional guarantee by Ford Motor Credit Company (“Ford Credit”) and the creditworthiness of Primus' parents, Ford Motor Company (“Ford”) and Ford Credit, both of the US, which are rated ‘BBB+’ with a Stable Outlook on the international scale. Any change in the international rating differential between Ford or Ford Credit and the Thailand’s Long-term local currency rating of ‘A-’ (A minus) could have an impact on the Thai national rating of Primus in the future.
As a financing arm created to support Ford's domestic vehicle sales, Primus is strategically important to Ford's operations in Thailand. Its hire purchase loans grew by 5% in 2003 and by 19% in the first nine months of 2004 (“9M04”). While average yield from hire purchase loans has declined due to increased competition and lower lending rates, margins and profitability remain relatively high. Net income in 9M04 has risen on the back of strong receivables growth following a fall in 2003 due to an increase in provisions and weaker loan growth as well as higher operating and tax expenses. The company's revenues are dependent on the sales of its captive car brands namely, Ford, Mazda, Land Rover and Volvo. While the number of cars sold in 9M04 increased from the prior period, Ford's overall market share (including Mazda, Land Rover and Volvo) remained unchanged at about 7%. The introduction of new models from Ford in 2005 should help boost sales, although the Japanese car producers remain dominant in Thailand.
Non-accrual loans have continued to improve to THB33 million at end-2003 with the delinquency ratio declining to 0.22% from 0.58% at end-2002 as a result of additional write-offs and more conservative marketing programmes in 2003. Its net charge-offs to average managed receivables ratio has continued to improve to 0.1% in 9M04 from 0.6% in 2003. Although non-accrual loans started to rise to THB56m at end-September 2004 with the delinquency ratio increasing to 0.36%, possibly as a result of high loan growth during 9M04, asset quality measures still remain strong. Primus's rapid debt-funded receivables growth has resulted in high leverage ratios, which stood at around 15.3x equity plus loan loss reserves as at September 2004. Fitch's concerns over the company’s high leverage are mitigated by the explicit guarantee of the notes by Ford Credit.
Contact:
Chaiyapat Paitoon, Vincent Milton, Bangkok +662 655 4762/4759;
David Marshall, Hong Kong +852 2263 9963
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(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable. End.