RAM Ratings reaffirms PacLease’s debt ratings

Published on 13 September 2012

RAM Ratings has reaffirmed the respective long- and short-term ratings of A2 and P1 for Pac Lease Berhad’s (“PacLease” or “the Company”) Commercial Papers/Medium-Term Notes Issuance Programme of up to RM500 million; the long-term rating has a stable outlook. 

PacLease has a stable profit track record, underpinned by a healthy and consistent net interest margin of more than 5% in the last few years. The Company’s pre-tax profit was lifted to RM21.3 million in FYE 31 December 2011 (“FY Dec 2011”), on the back of a 41% surge in gross receivables to RM782.2 million. PacLease’s gross impaired-loan (“GIL”) ratio only came up to 1.04% at the end of the period, after having benefited from its robust loan growth in recent years, which had enlarged its gross receivables base. Meanwhile, the Company’s significant exposure to small- and medium-sized enterprises renders it more vulnerable to economic vagaries. We will closely monitor any potential increases in PacLease’s GIL ratio as its loans become more seasoned, although its asset quality is expected to stay healthy. 

In tandem with its expanding loan base, PacLease’s gearing ratio increased from 2.96 times as at end-December 2010 to 3.90 times as at end-December 2011, which is still deemed manageable. Looking ahead, the Company is expected to assume more debt in light of its expansion plans. As at end-March 2012, the Company had sufficient unutilised credit facilities that may be used for its future growth and liquidity needs.

In May 2012, OCBC Capital (Malaysia) Sdn Bhd (“OCBC Capital”) increased its stake in PacLease, from an indirect 63.5% to 100%; OCBC Capital is fully owned by Oversea-Chinese Banking Corporation Limited. RAM Ratings will keep tabs on the extent of OCBC Capital’s post-restructuring operational integration and harmonisation between PacLease and OCBC Bank Malaysia Berhad (rated AAA/Stable/P1 by RAM Ratings), and the potential impact on PacLease’s ratings.

Media contact

Sophia Lee

(603) 7628 1189

sophia@ram.com.my