Berjaya Corp’s JV plans to sell RM1 bil – MARC bonds

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

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

CBC is a 70/30 joint venture between CHC and BCorp, according to MARC.

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

“[MARC] takes comfort in its established underwriting and collection measures which have been adopted from the proven guidelines and policies of its Taiwan-based sister company, Chailease Finance Co Ltd (CFC), CHC’s main operating subsidiary,” a- he declared.

MARC noted that CBC’s asset quality measure is stable, with its gross impaired funding ratio (GIF) sitting at a low 1.7% at the end of HY22, slightly above 1.6% there. one year old.

In HY22, CBC’s interest income increased 16.6% year-on-year to RM142.2 million, matching its pre-tax profit, which increased to RM69.4 million. Other than that, the net interest margin has been strong, hovering above 11%, and CBC relies primarily on bank borrowings, which have increased alongside its asset growth to $1.5 billion. RM at the end of 1H22.

MARC noted that CBC’s reliance on short-term revolving credit has declined to 36.9% as a proportion of total borrowing from its peak of 60.3% at the end of 2020.

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

Therefore, the proposed MTN program reflects the credit strength of CHC’s unconditional and irrevocable guarantee.

CHC’s consolidated funding portfolio stood at T$613.8 billion (RM90.9 billion) at the end of HY22 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 rose 0.5 sen or 2.17% to 23.5 sen, valuing the group at RM1.38 billion.