BDO Leasing and Finance, Inc. (BDOLF) secured the second highest debt rating from Philippine Rating Services Corp. (PhilRatings), in line with its application to sell commercial papers worth P15 billion.
PhilRatings assigned the leasing and finance segment of BDO Unibank, Inc. a rating of Prs AA, indicating that the company has a strong capacity to meet its financial obligations, it said in a statement.
The company was also given a stable outlook, meaning that the issuer credit rating will most likely remain the same in the next 12 months.
PhilRatings took into account BDOLF’s position in the commercial leading industry in coming up with the credit rating, noting that it is one of the leading players in the sector due to its strategic partnership with its parent. By the end of September 2017, BDO Unibank had a direct ownership of 87.43% of BDOLF’s common shares.
“BDOLF has largely benefited from the BDO Group’s extensive market reach and well-established presence throughout the country, in terms of marketing referrals,as well as the strong franchise of the Group. A significant percentage of BDOLF’s loan portfolio as of end of the period was accounted for by common clients with BDO,” according to PhilRatings.
Further, the debt watcher said BDO Unibank’s Institutional Banking Group will help BDO Leasing engage more corporate accounts for possible lease requirements.
PhilRatings also cited the leasing company’s continued asset expansion, with its leasing and financing portfolio for the first nine months of 2017 of P33.7 billion already surpassing its full-year 2016 figure of P31.4 billion.
Both the public and private sector’s push to increase spending in various sectors such as transportation, logistics and hauling, renewable energy, trading, and tourism, will also support the company’s expansion the coming years, the debt watcher said.
“Construction and transportation, which are major parts of its portfolio, will be instrumental in expanding the company’s assets, as most of the brand new equipment will need financing,” PhilRatings said.
BDOLF’s net income for the first nine months of 2017 slipped to P405.9 million, 4.4% lower year-on-year, amid gross revenues of P2.3 billion for the period.
“Going forward, BDOLF expects to continue expanding its business revenues. Increases in operating expense, however, will result in the compression of margins and returns,” PhilRatings said. — Arra B. Francia