-Credit Suisse Finance (India) debentures receive AA+r/"stable" rating by CRISIL.
6 January 2011 - Indian rating agency CRISIL today assigned a AA+r rating with a "stable" outlook to the principal protected equity-linked debenture issue of Credit Suisse Finance (India).
The agency issued the following press release:
Rs.1.5 Billion Principal Protected Equity Linked Debenture Issue AA+r/Stable (Assigned)
Rs.1 Billion Short-Term Debt Programme P1+ (Reaffirmed)
CRISIL has assigned its 'AA+r/Stable' rating to Credit Suisse Finance (India) Private Ltd's (CSFIL's) Rs.1.5-billion principal protected equity-linked debenture issue, and reaffirmed its 'P1+' rating on CSFIL's short-term debt programme. The ratings centrally factor in the strong expectation of support that CSFIL is likely to receive from its ultimate owner, Credit Suisse Group AG (CS Group, rated 'A/Stable/A-1' by Standard & Poor's [S&P]). CRISIL believes that close operational linkages, 100-per-cent ownership, and a shared brand name, imply a strong moral obligation on CS Group to support CSFIL, both on an ongoing basis and in the event of distress. CRISIL also believes that the Indian businesses are strategically important to the CS Group.
For arriving at its rating, CRISIL has combined the business and financial risk profiles of CSFIL and its group company Credit Suisse Securities (India) Pvt Ltd. (CSSIL), which is into institutional broking and investment banking. CSFIL and CSSIL are together referred to as the combine. There are significant operational linkages between the companies in the group.
CS Group is one of the world's largest financial services groups (second largest in Switzerland), with consolidated assets of CHF1.03 trillion as on December 31, 2009. CS Group extends operational and financial support to the combine, thereby helping it to remain adequately capitalised for its current scale of operations. As on March 31, 2010, CSFIL, which is a non-banking financial company (NBFC), had Tier I capital of Rs.10.78 billion, and a high Tier I capital adequacy ratio (CAR) of 292.46 per cent of risk-weighted assets. While such capitalisation is expected to moderate as CSFIL builds a stable portfolio, CRISIL expects the company to maintain its conservative gearing. CSSIL is also adequately capitalised, with a net worth of Rs.2.03 billion as on March 31, 2010.
The combine's standalone credit risk profile is supported by healthy capitalisation and robust risk management systems, which are in line with CS Group's global standards. However, CSFIL is a relatively new entity, having commenced active operations in 2008.
CRISIL believes that CSFIL will continue to receive management, funding, and technical support from the CS Group. The outlook may be revised to 'Positive' in case of material improvement in the CS Group's credit risk profile. Conversely, the outlook could be revised to 'Negative' in case of deterioration in the CS Group's credit risk profile or any adverse change in CRISIL's view on the support from the CS Group.
About the Company
CSFIL was acquired by CS Group in July 2008 (CSFIL was earlier known as Bokadia Marketing and Finance Private Ltd). CS Group has infused around Rs.12.58 billion in CSFIL since the acquisition, including a capital infusion of Rs.1.76 billion in April 2010. The target business segments for CSFIL include promoter financing, acquisition financing, loans against shares, margin financing, and fixed-income securities trading. The total loan portfolio was around Rs.2.9 billion, as on September 30, 2010. CSSIL is into institutional broking, having trading membership with the National Stock Exchange and the Stock Exchange, Mumbai. CSSIL is also a registered merchant banker and portfolio manager.
CSFIL reported a profit after tax (PAT) of Rs.486 million for 2009-10 (refers to financial year, April 1 to March 31), against a PAT of Rs.95 million for 2008-09. For the half year ended September 30, 2010, the company reported a profit after tax (PAT), subject to audit, of Rs.175.5 million as against a PAT of Rs.228.3 million for the corresponding period of the previous year.
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|Publication:||M2 EquityBites (EQB)|
|Date:||Jan 6, 2011|
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