Fitch Affirms National Ratings on BIIF, WOMF and CNAF; Outlook Stable

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April 17 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has affirmed the National Long-Term Ratings on Indonesia-based PT BII Finance Center (BIIF) and PT CIMB Niaga Auto Finance (CNAF) at 'AA+(idn)' and PT Wahana Ottomitra Multiarta Tbk's (WOMF) at 'AA(idn)'. The Outlook is Stable. A full list of rating actions is at the end of this rating action commentary.

'AA' National Long-Term Ratings denote expectations of low default risk relative to other issuers or obligations in the same country. However, changes in circumstances or economic conditions may affect the capacity for timely repayment to a greater degree than is the case for financial commitments denoted by a higher rated category.

'F1' National Short-Term Ratings indicate the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. On Fitch's National Rating scale, this rating is assigned to the lowest default risk relative to others in the same country. Where the liquidity profile is particularly strong, a "+" is added to the assigned rating.

KEY RATING DRIVERS- National Ratings

The rating affirmations on the multi-finance companies are underpinned by support from their higher-rated bank parents.

PT Bank Internasional Indonesia Tbk (BII; BBB/AAA(idn)/Stable), which is owned by Malayan Banking Berhad (Maybank, A-/Negative), fully owns BIIF and holds 62% of WOMF. PT Bank CIMB Niaga Tbk (CIMB Niaga; AAA(idn)/Stable), which is owned by CIMB Group Holdings Bhd, fully owns CNAF.

In case of BIIF and CNAF, the ratings take into account their strong linkage with and strategic importance to BII and CIMB Niaga, respectively, in expanding the consumer financing business in Indonesia. The ratings also reflect on-going funding support from the parents to the subsidiaries. In the case of WOMF, the ratings reflect relatively moderate linkage with BII and hence moderate probability of extraordinary support from BII.

Fitch expects all the three multi-finance companies to maintain satisfactory stand-alone financial profiles with regular parental support in operations, funding and capital. Aggressive business growth by CNAF has raised its leverage, with its debt-to-equity ratio at 7.3x at end-2013. However, Fitch expects the company to receive a capital infusion in 2014 from its parent to bring down its leverage. BIIF and WOMF are less leveraged with debt-to-equity ratios of 4.5x and 5.5x, respectively, at end-2013 compared with the regulatory limit at 10x. The more challenging economic conditions, including possibly higher interest rates, are likely to pressure the three companies' asset quality and profitability in 2014. CNAF's aggressive growth strategy and WOMF's exposure to higher-risk two-wheeler financing will add to these challenges. BIIF and CNAF focus on providing car financing, while WOMF focuses on motorcycle financing.

RATING SENSITIVITIES - National Ratings

Any significant dilution in ownership by, or perceived weakening of support from the parents would exert downward pressure on the ratings on BIIF, WOMF, and CNAF, including the possibility of multi-notch downgrades. However, Fitch sees this prospect as remote in the foreseeable future, given their strategic roles in expanding their parents' business exposure in Indonesia's fast-growing consumer financing market.

Rating upside could arise if BIIF and CNAF are perceived to have become even more important to BII and CIMB Niaga, respectively. Evidence of stronger integration between parent and subsidiary (for example, if there is a significant increase in joint financing portion and cross-selling activities), and stronger parental support would also be positive for the ratings. The rating differential between BII and WOMF could narrow in the event of BII increasing its ownership in WOMF to above 75%, a name sharing arrangement, greater operational integration between the two entities, or other forms of tangible support from the parent to the subsidiary.

RATING SENSITIVITIES - Debt Ratings

The ratings of the banks' rupiah-denominated senior bonds and medium-term notes are the same as their National Long-Term Rating. This is because these debts constitute direct, unsubordinated and senior unsecured obligations of the concerned entities and rank equally with all their other unsecured and unsubordinated obligations. Any changes in the National Long-Term Ratings would affect these issue ratings.

FULL LIST OF RATING ACTIONS:

BIIF

National Long-Term Rating affirmed at at 'AA+(idn)'; Outlook Stable

National Short-Term Rating affirmed at 'F1+(idn)'

Rupiah Senior Bond I/2012 affirmed at 'AA+(idn)'

Rupiah Senior Bond II/2013 affirmed at 'AA+(idn)'

Medium-term notes V/2013 affirmed at 'AA+(idn)'

WOMF

National Long-Term Rating affirmed at 'AA(idn)'; Outlook Stable

National Short-term Rating affirmed at 'F1+(idn)'

Rupiah Senior Bond V/2011 affirmed at 'AA(idn)'

Subordinated debt affirmed at 'AA-(idn)'

CNAF:

National Long-Term rating affirmed at 'AA+(idn)'; Outlook Stable

National Short-Term rating affirmed at 'F1+(idn)'

Medium Term Notes affirmed at 'AA+(idn)'

Rupiah Senior Bonds affirmed at 'AA+(idn)'