KEY RATING DRIVERS
The RWN reflects uncertainty over FNS's business direction and a potentially significant weakening in its financial profile after the disposal of stakes in two securities companies: 29.3% of Finansia Syrus Securities Public Company Limited (FSS, BBB+(tha)/Stable) and 100% of Finansa Securities Ltd (FSL).
Investment advisory and securities-related activities had been the key businesses for FNS, and the disposal leads to a material change in FNS's business model. FNS will become mainly focused on property investment and it is most likely that FNS will be rated under our Corporate Rating Criteria.
Fitch expects to resolve the RWN when we believe that the information is sufficient to assess FNS's strategic direction, upcoming balance-sheet structure and plans to generate recurring income over the medium term. We expect such an appraisal to be completed within six months.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
Fitch may downgrade FNS's rating if we believe earnings and cash generation will be persistently weakened compared with the debt after assessing the debt-reduction and asset-reinvestment plans. Any further changes in FNS's business profile that suggest a substantial weakening of its existing franchise and/or an increase in risk appetite could also lead to a reassessment of its credit profile.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
A rating upgrade appears unlikely in the near term, given the evolving business model and the significant decline in recurring income from the FSS disposal. In the medium to longer term, new investments that generate substantial recurring income, leading to improving profitability and debt-servicing capacity on a sustained basis, combined with a more robust business model, could be positive for the credit profile.
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.
Additional information is available on www.fitchratings.com
Source: Fitch Ratings