OREANDA-NEWS. Fitch Ratings Indonesia has affirmed the National Long-Term Rating of PT BCA Finance (BCAF) at 'AAA(idn)'. The Outlook is Stable. A full list of rating actions is at the end of this rating action commentary.

The affirmation of BCAF's ratings reflects Fitch's assessment of the continued strong support from and linkage with its shareholder, PT Bank Central Asia Tbk (BCA; AAA(idn)/Stable).

'AAA' National Ratings denote the highest rating assigned by Fitch on its national rating scale for that country. This rating is assigned to issuers or obligations with the lowest expectation of default risk relative to all other issuers or obligations in the same country.

'F1' National Short-Term 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
BCAF's ratings reflect Fitch's expectation of a strong probability of support from its parent in times of need, since BCAF is viewed as a core subsidiary supporting BCA's business expansion in Indonesia's consumer financing market. The Stable Outlook reflects Fitch's expectations that the parent's support for BCAF is unlikely to diminish in the medium term.

As an integral part of BCA's consumer business chain, BCAF has an important role in managing BCA's car-loan portfolio, which constituted a significant 37% of BCA's consumer loans at end-2015. BCA's support is manifested in the common brand-name it shares with BCAF, funding provision and operational alignment, such as utilisation of BCA's branch network. Business referrals from BCA are also significant, representing about 50% of BCAF's new financing in 2015.

In Fitch's view, strong funding support from its parent will help BCAF sustain its competitive lending rates. BCAF's low debt-to-equity of 1.7x at end-2015 reflects its substantial reliance on without-recourse joint-financing from the parent, where BCA bears the credit-risk, rather than borrowings from third-parties.

RATING SENSITIVITIES
Any significant dilution in BCA's ownership or perceived weakening of support (propensity or ability) would exert downward pressure on BCAF's ratings, including the possibility of multi-notch downgrades. However, Fitch sees this prospect as remote, given BCAF's core role in BCA's consumer business strategy. There is no rating upside as the rating is already at the top-end of the scale.

The senior bonds and bond programme are rated at the same level as BCAF's National Long- and Short-Term Ratings in accordance with Fitch criteria. Any changes in the company's National Long- and Short-Term Ratings would affect the ratings of these issues.

The full list of rating actions follows:

National Long-Term Rating affirmed at at 'AAA(idn)'; Outlook Stable
National Short-Term Rating affirmed at 'F1+(idn)'
Bond Programme II 2015 and its tranches under the program affirmed at 'AAA(idn)' and 'F1+(idn)'
Rupiah senior debt tranches under the program I/2012 affirmed at 'AAA(idn)'