|
Press Releases / 02.12.2013
Press Release as of 02.12.2013 JSC Agency for Supporting Small and Medium-sized Businesses, regional microfinance institution of Leningrad region CJSC AK&M Rating Agency affirmed the 'A+' guarantee institution rating of OJSC Credit Guarantee Agency as per the national scale, with a stable outlook. The 'A+' rating indicates a high credit standing of the Company. The risk of a failure to meet liabilities in time is insignificant. Open joint-stock company Credit Guarantee Agency operating as a regional guarantee organization (fund) is the key element of the SME support infrastructure in Russia's federal subject Leningrad region. The Company's mission is to provide guarantees for loans and other debt obligations of SME businesses registered in the region, where collateral coverage is insufficient. The rating of OJSC CGA s primarily supported by the high and steadily groinwg key performance indicators of the guarantee institution. For January-September 2013, the company's equity capital increased by 18.9% (from RUB 234.9 million to RUB 279.3 million) as a result of both higher contributions to its authorized capital form the budget, and growing retained earnings. For the same period, the fund's portfolio of surety commitments increased by 14.4% reaching RUB 275.8 million. The Company's off-balance sheet liabilities increased in parallel with a reduction in the amount of lending to SME businesses in the region (-1.0% for 9 months 2013). As of November 10, 2013, the guarantee capital multiple was about 107%, just under the average market percentage (122% as of October 1, 2013). The portfolio of off-balance sheet liabilities is well diversified in terms of maturity, the concentration of surety commitments in individual sectors is nowhere above the comfortable level. The Company's main assets are municipal bonds and deposits with Russia's credit institutions ranked in the TOP 100 largest Russian banks, rated at least 'A+' as per the national scale by AK&M Rating Agency and picked through competitive tendering. This asset structure indicates high safety of the financial investments securing the Agency's obligations. Also, the guarantee fund has a sufficient liquidity cushion to ensure the Company will meet its obligations should payments be demanded by credit institutions and leasing companies. The cash funds and resources which can be unconditionally drawn from the deposit accounts while preserving the Company's revenue position are ten times the average off-balance sheet commitment. Payments arising from the Company's guarantees are relatively low. It will be noted that CGA recovers more than 30% of such expenses from the respective SME businesses through applicable subrogation (recourse) procedures. In terms of order 223 of Russia's Ministry of Economic Development dated April 23, 2012, the fund's balanced loss as of October 1, 2013 totaled RUB 8.7 million (0.9% of the total amount of surety commitments) – which is far below the regulatory ceiling. The low risks assumed by CGA resulting from a well-diversified portfolio of surety commitments (158 contracts in force as of October 1, 2013, average surety bond being RUB 1.75 million) and the appreciable quality of the risk management system also contribute to the Company's high rating. Based on the statistical simulation of flows of virtual payments due under the current surety agreements, AK&M analysts estimated the risk of the fund's topping the loss ratio threshold at 7.11%. Other risk ratios are much below that. At the same time, the concentration of surety commitments related to the Company's largest banking partner stays high, and the nine-month profit and revenues decreased year-on-year, although not fatally (by 13.2% and 6.9% year-on-year, respectively), which we regard as moderately negative drivers for the guarantee fund's rating.
The Company (full name: Open Joint Stock Company Credit Guarantee Agency, short name: OJSC CGA) was registered on August 14, 2003. The Company's sole founder (shareholder) is the Government of Leningrad region represented by the Regional Committee for City Property Management. CGA undertook the first surety commitment on April 1, 2004. Over the period of its existence, the fund concluded more than 480 guarantee and surety agreements for a total of more than RUB 1 billion, raising SME-targeted external investments of 9 rubles per each ruble of the public sector invested. As of October 1, 2013, CGA's portfolio of surety commitments amounted to RUB 275.8 million, the funds raised reached RUB 279.3 million. The Company's reports are audited by UNIKON-AUDIT LLC.
This press release is based on the statement of assigning a credit rating to CGA. The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company's reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities to the Company. CJSC AK&M Rating Agency will not incur any responsibility for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties. CJSC AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993. CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010). AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Regulation 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide cash and settlement services to project and engineering companies implementing investment projects), and the MICEX (for the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation and bond listing purposes). By a resolution of Russia's Government AK&M Ratings count for the recapitalization of banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.
CJSC AK&M Rating Agency |
