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ADVANTA $1 BILLION SENIOR SHELF RATED 'BBB-' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Nov. 3 /PRNewswire/ -- Advanta Corp.'s $1 billion senior debt shelf registration is rated 'BBB-' by Fitch. The credit trend is stable. The rating reflects the company's strong profitability, good asset quality, and recently improved balance sheet capitalization. Concerns focus on a single-product concentration in the highly competitive credit card market, management's historical aggressiveness, and a limited funding base to date. This shelf registration will enable the company to expand its funding sources.
 Advanta is a highly focused direct marketer of selected consumer financial services, primarily credit cards and home equity loans. Including securitized receivables, the company had $5.4 billion of total managed assets at Sept. 30, 1993. Credit cards represent 83 percent of Advanta's $1.2 billion owned receivables. The company, specializing in marketing a no-fee gold card, has shown increasingly strong profits and good asset quality in this area, despite heightened market competition and a national recession that resulted in high consumer bankruptcies. Home equity loans, at 9 percent of owned receivables, target a higher- risk customer than the credit card portfolio and are experiencing some asset quality deterioration caused by the sluggish economy and depressed real estate prices. The remainder of the portfolio is small ticket equipment leases.
 Advanta historically was managed aggressively on the financial side, employing high degrees of leverage and double leverage. In the late 1980s, management began to deleverge the company to a more conservative level. Equity has grown to $318 million at Sept. 30, 1993 from $50 million at year-end 1988 through retained earnings and two stock offerings - $20 million in 1991 and $90 million in 1993. Equity to assets increased to 16.4 percent from 4.3 percent at Dec. 31, 1988, and double leverage improved to 100% at Sept. 30, 1993 from 360 percent at year-end 1988.
 Advanta is highly profitable, with return on average assets increasing steadily to 3.73 percent for the annualized nine months ended Sept. 30, 1993 from a loss position in 1988. Asset quality is strong and reserve coverage is good. Funding sources are limited, relying primarily on the securitization market. To date, the company has completed 34 transactions totaling $5.2 billion. Other funding sources include Colonial's deposit base and, to a lesser extent, a retail subordinated note program at the holding company. With its newly bolstered equity base and more conservative leverage position, the shelf registration indicates the company will now access the capital markets as an additional source of funds.
 -0- 11/3/93
 /CONTACT: Helene L. Moehlman, CFA, 212-908-0606, or Nancy E. Stroker, CFA, 212-908-0533, both of Fitch/


CO: Advanta Corp. ST: New York IN: FIN SU: RTG

WB -- NY033 -- 0087 11/03/93 11:08 EST
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Publication:PR Newswire
Date:Nov 3, 1993
Words:449
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