KUALA LUMPUR (Sept 29): Chailease Berjaya Credit Sdn Bhd (CBC), a joint venture (JV) between Taiwan-based Chailease Holding Co Ltd (CHC) and Berjaya Corp Bhd (BCorp), is planning a RM1 billion bond sale as CBC expands its financing operations for new motorcycles, Malaysian Rating Corp Bhd (MARC) said on Thursday (Sept 29).

"[MARC] has assigned a preliminary rating of AA-(cg) on CBC's proposed RM1 billion medium-term notes (MTN) programme. The rating outlook is stable. The programme carries an unconditional and irrevocable guarantee from CBC's ultimate holding company CHC," MARC analysts wrote in a note.

CBC is a 70:30 JV between CHC and BCorp, according to MARC.

CBC, with a financing portfolio of RM1.9 billion in the first half of 2022 (1H22), expects to maintain its current double-digit annual growth rate amid the rising interest rate environment coupled with inflationary pressure in mind. 

“[MARC] draws comfort from its established underwriting and collection measures that have been adopted from the well-tested guidelines and policies of its Taiwan-based sister company, Chailease Finance Co Ltd (CFC), the main operating subsidiary of CHC,” it said.

MARC noted that CBC’s asset quality metric is stable with its gross impaired financing (GIF) ratio standing at a low 1.7% at end-1H22, slightly higher than 1.6% a year ago.

In 1H22, CBC’s interest income rose 16.6% year-on-year to RM142.2 million, corresponding to its pre-tax profit, which increased to RM69.4 million. Aside from that, net interest margin has been strong, hovering above 11%, and CBC relies primarily on bank borrowings, which grew in line with its asset growth at RM1.5 billion as at end-1H22.

MARC commented that CBC’s reliance on short-term revolving credit has declined at 36.9% as a proportion of total borrowings from its high of 60.3% as at end-2020. 

“CBC's growth has been supported by periodic capital injections from its shareholders, CHC and BCorp, totalling RM175 million since its inception in October 2015,” added the ratings agency. 

Accordingly, the proposed MTN programme reflects the credit strength of the unconditional and irrevocable guarantee from CHC.

CHC's consolidated financing book stood at T$613.8 billion (RM90.9 billion) as at end-1H22 with a GIF ratio of 2.2%. MARC Ratings has assigned a public information rating of AA-/Stable to CHC.

At the time of writing, BCorp's share price ticked up 0.5 sen or 2.17% to 23.5 sen, valuing the group at RM1.38 billion.