Bangkok--23 Aug--TRIS Rating TRIS Rating Co., Ltd. has assigned a “A-” rating to Phatra Leasing PLC’s (PL) proposed issue of up to Bt400 million in senior debentures. At the same time, TRIS Rating has affirmed the company rating of PL and the ratings of its current senior debentures at “A-”. The rating outlook is “stable”. The ratings reflect the demonstrated ability of PL’s management to maintain a strong market position in the automobile operating lease business despite increasingly intense competition. The ratings also reflect the company’s good risk management system and conservative underwriting process that have enabled PL to maintain good asset quality as its portfolio expands. The ratings also take into consideration increasing demand for outsourcing of automobile maintenance activities by corporates. However, a less favourable operating environment following an expected drop in domestic automobile sales in 2007, and severe competition from newcomers will continue to be major constraints for PL’s profitability and business expansion in the future. The “stable” outlook reflects PL’s ability to maintain its leading position in the automobile operating lease business and deliver medium-term performance as expected. The company is likely to retain its existing major clients, as well as expand its customer base while maintaining its good asset quality. However, the business expansion plans and profitability are still pressured by existing intense competition and an expected drop in domestic sales of new automobiles in 2007.TRIS Rating reported that PL maintained its market leading position in automobile operating lease for several years. During 2001-2006, PL posted the largest market share of about 30% of total leased assets held, the most among the 25 large operators in TRIS Rating’s database. PL’s business and profitability during the first nine months of FY2007 (9M07) (October 2006-June 2007) gradually improved. Although pressured by intense competition and an unfavourable operating environment, PL’s average new lease assets recovered to Bt338 million per quarter during the first three quarters of FY2007, up from Bt215 million per quarter in FY2006. PL’s financial performance in 9M07 was also better than the same period of last fiscal year. The rise was mainly due to a sharp increase in recurring income generated from gains on disposals of assets held for lease and property foreclosed, to Bt90 million from Bt34 million. PL’s net profit was Bt181 million in 9M07, improving from Bt136 million in 9M06, despite a decline in rental income from operating lease contracts. The company funded most of its asset growth by borrowing, resulting in high leverage. As of June 2007, PL’s ratio of debt to capitalization continued to improve due to a downside in its leased assets. TRIS Rating said that PL’s proposed issue of up to Bt400 million in senior debentures will replace the company’s existing debentures scheduled to be redeemed in September 2007.