OREANDA-NEWS. Fitch Ratings Indonesia has assigned ratings to PT Federal International Finance's (FIF; AAA(idn)/Stable) proposed senior unsecured bonds, as follows:

- bonds with a maturity of 36 months assigned a National Long-Term Rating of 'AAA(idn)'
- bonds with a maturity of 370 days assigned a National Short-Term Rating of 'F1+(idn)'.

This is the second tranche to be issued under FIF's debt programme. The issue size will be up to IDR3.5trn, and the proceeds used to support business growth.

'AAA' National Long-Term 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 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
The bonds are rated at the same level as FIF's National Long-Term and Short-Term Ratings, in accordance with Fitch's criteria.

The ratings reflect Fitch's expectation that FIF will receive support from parent PT Astra International Tbk (AI), in time of need. This is based on FIF's significant contribution to AI's core motorcycle business and the parent's almost 100% ownership of FIF. As an integral part of AI's motorcycle business chain, FIF has an important role in providing direct financing services for the purchase of Honda motorcycles produced by Astra Honda Motor (AHM), a 50:50 joint venture between AI and Honda Motor Co., Ltd (A/Stable).

RATING SENSITIVITIES
Any changes in FIF's National Ratings would affect the issue ratings.

There is no rating upside for FIF's National Ratings as it is already at the top of the scale.

A significant drop in contribution from FIF to AI would result in negative rating action. A significant decline in AI's ownership and any deterioration in its performance or support would also exert downward pressure on the ratings of FIF, although Fitch considers this prospect to be remote in the foreseeable future, given the importance of FIF to AI's and Astra Honda Motor's core motorcycle business.