Fitch Rates Seif-Lombard 'B-'; Outlook Stable.

ENPNewswire-September 1, 2021--Fitch Rates Seif-Lombard 'B-'; Outlook Stable

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Release date- 31082021 - Fitch Ratings has assigned Seif-Lombard LLC (SL) Foreign- and Local-Currency Long-Term Issuer Default Ratings (IDRs) at 'B-'.

The Outlook on the Long-Term IDRs is Stable. A National Long-Term Rating of 'B+(kaz)' has also been assigned.

Key Rating Drivers

The ratings of SL reflect its small franchise in Kazakhstan's finance sector, its monoline business model with a concentration on gold-backed micro-loans, basic underwriting standards and risk controls as well as a less than developed funding profile with assets mostly funded by equity and related-party loans. The ratings also factor in the benefits of a granular mostly short-term secured loan portfolio, backed by high-quality liquid collateral, adequate profitability with limited credit losses as well as solid capital buffers.

The Stable Outlook on the Long-Term IDRs reflects Fitch's view of moderating pandemic-related economic pressures in Kazakhstan, as well as SL's record of solid performance during the stressed period.

Established in April 2009 SL is based in Kazakhstan and operates as a pawn shop issuing secured loans with unlimited roll-over to under-banked clients with limited credit history, backed mostly by gold (around 90%) and used cars. It is one of the largest pawn brokers in the country, but its franchise is modest relative to local finance companies'. Its total loan portfolio amounted to around KZT11 billion at end-1H21 (USD26 million) and it operates mainly in towns in the south of Kazakhstan through 11 regional branches and 116 service points.

SL is planning to rapidly expand its loan portfolio (400% by end-2023) and increase the share of loans backed by used cars to 50% by end-2023 (around 10% at end-1H21). Management plans to tap Kazakhstan's and Russia's bond markets, and raise funds from international financial institutions for its growth.

SL is going through a reorganisation in which it will merge with a sister company Altyn Bastau LLP, which is currently SL's largest creditor. Providing debt to SL is Altyn Bastau's only activity, fully funded from company's equity, which will convert into SL's equity once the acquisition is completed. Management says the reorganisation will simplify SL's corporate structure and increase capital (to around USD23 million at end-2021) to support external debt funding plans. Key person...

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