OREANDA-NEWS. Fitch Ratings Indonesia has affirmed the National Long-Term Ratings on PT CIMB Niaga Auto Finance (CNAF) and PT Maybank Indonesia Finance (MIF) at 'AA+(idn)' and on PT Wahana Ottomitra Multiartha Tbk (WOMF) at 'AA(idn)'. The agency has also affirmed their National Short-Term Ratings at 'F1+(idn)'.

The Outlooks on the ratings are Stable, reflecting continued support from their higher-rated parents. A full list of rating actions is at the end of this commentary.

'AA' National Ratings denote expectations of low default risk relative to other issuers or obligations in the same country. However, changes in circumstances or economic conditions may affect the capacity for timely repayment to a greater degree than is the case for financial commitments denoted by a higher rated category.

'F1' National Ratings indicate the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. On Fitch's National Rating scale, this rating is assigned to the lowest default risk relative to others in the same country. Where the liquidity profile is particularly strong, a "+" is added to the assigned rating.

KEY RATING DRIVERS

NATIONAL RATINGS
The ratings are driven by Fitch's view that the parents of CNAF, MIF and WOMF would provide timely support to their subsidiaries, should it be needed. The subsidiaries play important roles in expanding their parents' consumer businesses in Indonesia.

Fitch views CNAF and MIF as strategically important subsidiaries of PT Bank CIMB Niaga Tbk (CIMB Niaga; BBB/AAA(idn)/Stable) and PT Bank Maybank Indonesia Tbk (Maybank Indonesia; BBB/AAA(idn)/Stable), respectively, because of their strong linkages. This is evident from their parents' full ownership and name sharing with the subsidiaries, strong operational alignment, provision of funding support to the subsidiaries and significant contributions the subsidiaries make to their parents' loan portfolios. The ratings of the parents are in turn driven by strong support from Malaysian-based ultimate parents CIMB Group Holdings Bhd and Malayan Banking Bhd (Maybank; A-/Negative).

In the case of WOMF, the ratings reflect moderate linkage with Maybank Indonesia; thus Fitch expects a moderate probability of extraordinary support from Maybank Indonesia, which owns 68.55% of WOMF.

The parents' commitment to their subsidiaries is underscored by their extension of capital support when required. CNAF obtained a capital injection of IDR300bn from CIMB Niaga at end-2014 while WOMF received IDR200bn of fresh capital in 2015 from Maybank Indonesia through a rights issue that slightly increased Maybank Indonesia's stake in the subsidiary. The capital injections have helped the subsidiaries to maintain their gearing ratios at manageable levels. The funding support via joint-financing schemes, where the parents continue to bear the credit risk, remained substantial at about 50%-70% of the three subsidiaries' managed receivables in 2015.

DEBT RATINGS
The ratings of the consumer finance companies' rupiah-denominated senior bonds and medium-term notes are the same as their National Long-Term Ratings in accordance with Fitch's criteria.

RATING SENSITIVITIES

NATIONAL RATINGS
Any significant dilution in ownership by, or perceived weakening of support from, the parents would exert downward pressure on the ratings on CNAF, MIF and WOMF, including the possibility of multi-notch downgrades. However, Fitch sees this prospect as remote in the foreseeable future, given their strategic roles in expanding their parents' businesses in Indonesia's consumer financing market. Any changes to the parents' ratings, or, in the case of MIF and WOMF, a multiple notch downgrade in the ultimate parent's rating, could also impact on the ratings of the consumer finance companies.

Rating upside could arise if Fitch were to perceive CNAF and MIF as core subsidiaries of CIMB Niaga and Maybank Indonesia, respectively. This would likely result in an equalisation of CNAF and MIF's ratings with their respective parents' national ratings, based on Fitch criteria. For CNAF, evidence of stronger integration between parent and subsidiary (for example, if there is a significant increase in joint financing and cross-selling activities), resulting from recent changes to its business model could lead us to upgrade the rating. For MIF, evidence of stronger integration between parent and subsidiary, and higher contribution to its parent's assets and income on a sustainable basis could lead us to equalise their ratings.

The rating differential between Maybank Indonesia and WOMF could narrow if the parent shares its name with WOMF, develops greater operational integration with the subsidiary, or provides other forms of tangible support to the subsidiary.

DEBT RATINGS
Any changes in the National Long-Term Ratings would affect the issue ratings.

FULL LIST OF RATING ACTIONS:
CNAF:
National Long-Term rating affirmed at 'AA+(idn)'; Outlook Stable
National Short-Term rating affirmed at 'F1+(idn)'
Medium term notes series II affirmed at 'AA+(idn)'

MIF
National Long-Term Rating affirmed at 'AA+(idn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1+(idn)'
Rupiah senior bond I series C/2012 affirmed at 'AA+(idn)'
Rupiah senior bond II/2013 affirmed at 'AA+(idn)'
Rupiah senior bond programme I/2015 and tranches under the programme affirmed at 'AA+(idn)' and 'F1+(idn)'

WOMF
National Long-Term Rating affirmed at 'AA(idn)'; Outlook Stable
National Short-term Rating affirmed at 'F1+(idn)'
Rupiah senior bond programme I/2014 and tranches under the programme affirmed at 'AA(idn)' and 'F1+(idn)'