RAM Ratings reaffirms AAA(bg)/P1 ratings of ORIX Leasing's debt facilities

Published on 28 December 2011
RAM Ratings has reaffirmed the AAA(bg) rating of ORIX Leasing Malaysia Berhad’s (“ORIX Leasing” or “the Group”) up to RM150 million Bank-Guaranteed Medium-Term Notes Programme (“BGMTN”) and the P1 rating of its up to RM150 million Commercial Papers Programme (“CP”); the long-term rating has a stable outlook. The AAA(bg) rating reflects the strength of the irrevocable and unconditional guarantee from Malayan Banking Berhad, which carries AAA/Stable/P1 ratings from RAM Ratings. The backing of this guarantee enhances the credit profile of the BGMTN beyond ORIX Leasing’s inherent stand-alone credit risk.

ORIX Leasing is wholly owned by ORIX Corporation of Japan and has a track record of more than 30 years in the Malaysian leasing market. Its credit fundamentals had remained sound during the period under review. The Group’s gross impaired-loan (“GIL”) ratio stood at a healthy 2.9% as at end-September 2011, with a high GIL coverage level of 125.3%. Moving forward, we expect the Group’s asset quality to remain stable, underscored by the management’s prudent credit culture.

Notably, ORIX Leasing’s profit performance has remained stable. While the Group’s pre-tax profit climbed up to RM90.7 million in FYE 31 March 2011 (“FY Mar 2011”), supported by its larger share of an associate’s profits, its operating profit stayed steady at RM84.1 million (FY Mar 2010: RM82.4 million). In 1H FY Mar 2012, the Group chalked up a pre-tax profit of RM51.6 million, supported by healthy loan growth. Not being able to accept deposits like commercial banks, Orix Leasing relies much on bank borrowings and the debt capital market to fund its lending operations. As at end-September 2011, the Group’s gearing ratio stood at 2.4 times while its capitalisation level remained strong, with a capital-adequacy ratio of about 28%.

Media contact
Shireen Ng
(603) 7628 1021
shireen@ram.com.my