OREANDA-NEWS. Fitch Ratings has assigned Indonesia-based PT Astra Sedaya Finance (ASF) a Long-Term Issuer Default Rating (IDR) of 'BBB-' and Short-Term IDR of 'F3'. The agency has affirmed the company's National Long-Term and Short-Term Ratings at AAA(idn) and F1+(idn) respectively . The outlook is Stable. At the same time, Fitch Ratings has assigned ASF's proposed USD1bn euro medium-term note (EMTN) programme a senior unsecured rating of 'BBB-(EXP)', and its proposed notes under the EMTN programme a rating of 'BBB-(EXP)'. The final rating on the proposed notes is contingent on the receipt of final documents conforming to information already received. A full rating breakdown is provided at the end of this commentary.

Fitch stresses there is no assurance that notes issued in the future under the programme will be assigned a rating, or that the rating assigned to a specific issue under the programme will have the same rating as the programme. The proceeds from the proposed issue will be used for ASF's general corporate purposes.

KEY RATING DRIVERS - IDRs
ASF's ratings reflect Fitch's expectation of a high probability of support from its majority shareholder, PT Astra International Tbk (AI). Fitch considers ASF as a strategically important subsidiary of AI, as ASF accounts for a sizable portion (around 30% in 2014) of the parent's automobile credit sales. The support also reflects AI's significant 86% effective ownership as well as ASF's strong synergies and integration with the parent. AI is the largest automobile manufacturer and distributor with a dominant 51% share of the market in Indonesia by new car sales.

ASF provides direct financing services for buyers who purchase AI's cars, playing an important role in supporting AI's sales. AI is Indonesia's largest private company by market capitalisation; it is a market leader in the automotive, financial services, agribusiness, heavy equipment and information technology sectors. It is 50.1% owned by Jardine cycle & Carriage Ltd, part of Jardine Matheson Group.

Fitch expects ASF to continue delivering healthy profitability in 2015 in spite of a challenging economic environment, underpinned by its manageable credit and funding costs.

RATING SENSITIVITIES - IDRs, National Ratings
Any significant decline in AI's ownership and/or ASF contribution to AI would exert downward pressure on its IDRs and National ratings. However, Fitch believes this scenario is unlikely in the foreseeable future, given ASF's strategic importance to AI's core automotive business. ASF's ratings are also sensitive to Fitch's assessment of AI's credit profile; any change of the AI's assessment will likely lead to a review of ASF's IDRs.

KEY RATING DRIVERS AND SENSITIVITIES - Debt Ratings
ASF's proposed euro medium-term notes are rated as the same level as its IDR in accordance with Fitch criteria. Any changes in ASF's IDR would affect the issue ratings.

The list of rating actions is as follows:

Long-Term Issuer Default Rating (IDR) assigned 'BBB-'; Stable Outlook
Short-Term Issuer Default Rating (IDR) assigned 'F3'
National Long-Term Rating affirmed at 'AAA(idn)'; Stable Outlook
National Short-Term Rating affirmed at 'F1+(idn)'
USD1bn Senior EMTN programme and senior tranches under the programme assigned 'BBB-(EXP)'
National Senior Bond Programme II 2013 and senior tranches under the programme affirmed at 'AAA(idn)' and 'F1+(idn)'