KEY RATING DRIVERS
EB's ratings are driven by Fitch's view that it is a strategically important subsidiary of Japan-based ACOM CO., LTD. (BBB+/Stable), which is one of Japan's leading providers of consumer-finance services. EB complements ACOM's strategy of diversifying its business in Asian markets, making use of the group's consumer-lending expertise. ACOM owns 71% of EB, with high levels of management control and operational integration. ACOM has also provided ordinary support, including risk management and funding. EB's profitability has been consistently sound, with pretax income/average assets of above 10% for the past four years. It is one of the largest non-bank personal loan companies in Thailand.
EB's senior debt is rated at the same level as the company's National Long-Term Rating, as it represents the unsecured and unsubordinated obligations of the borrower.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
There could be positive rating action from an improvement in support assumptions, including positive rating action on ACOM's Long-Term Issuer Default Rating (IDR) as this would indicate improved ability to support its subsidiary. A significant increase in EB's strategic importance to the group, including its contribution to the group in expanding its regional franchise and enhancing its role within the group, may also lead to an upgrade. Any assessment of support prospects would also have to take into account the relativity of its rating on Thailand's national scale.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A decline in the ability or propensity of ACOM to support EB could lead to negative rating action, while also taking into account EB's relative position on the Thai national scale. This could be indicated by a downgrade of ACOM's Long-Term IDR, which would lead to similar action at the Thai subsidiary.
A significant decline in linkages, such as a decrease in shareholding to below 50%, combined with diminished control and integration, could indicate a decline in support propensity and may also lead to negative rating action. However, Fitch does not expect any changes in support propensity to occur in the near term.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
EB's ratings are linked to the credit profile of ACOM.
Additional information is available on www.fitchratings.com
Source: Fitch Ratings