JCR Eurasia Rating upgraded the Long Term National Local Rating to A-(Trk) from BBB+(Trk), the Short Term National Local Rating to A-1(Trk) from A-2(Trk) and affirmed the Long Term International FC and LC ratings at BBB- of INTERCITY (Ekim Turizm Ticaret

JCR Eurasia Rating, by assessing “Intercity” within investment grade, has upgraded credit rating notes of ‘BBB+ (Trk)’ to „A- (Trk)‟ on the Long Term National Scale, „A-2 (Trk)‟ to „A-1 (Trk)‟ on the Short Term National Scale along with „Stable‟ outlooks for all notes. On the other hand, the Long Term International Foreign and Local Currency ratings were affirmed at ‘BBB-’. Other notes and details of the ratings are given in the table below:

Long Term International Foreign Currency

:

BBB- /(Stable Outlook)

Long Term International Local Currency

:

BBB- /(Stable Outlook)

Long Term National Local Rating

:

A- (Trk) /(Stable Outlook)

Short Term International Foreign Currency

:

A-3 /(Stable Outlook)

Short Term International Local Currency

:

A-3 /(Stable Outlook)

Short Term National Local Rating

:

A-1 (Trk)/(Stable Outlook)

Sponsor Support

:

2

Stand Alone

:

B

Intercity, maintaining its operations as one of the first movers and the market leader in the Turkish operational fleet lease sector provides services mainly for its reputable corporate clientele with high cash generating capacity operating in many different sectors together with its efforts to focus more on medium sized segment as part of its general strategy during the previous years. Maintenance and repair services within its range of services are offered through its self-owned service locations in Istanbul, Izmir and Ankara as well as an authorized service network in other locations across the country.

As evidenced by the continuing downward trend in the number of the vehicles per client during the recent years, SMEs as well as large companies prefer leasing rather than purchasing to meet their vehicle needs notwithstanding the demand by the large-scale companies still constitutes the main growth dynamic for the sector. Moreover, the fact that the campaigns targeted at individuals gather pace creates new growth opportunities for the Turkish fleet leasing sector. Taking further into account increasing awareness with a view to enjoying wide-ranging service packages in the client perspective as well as customer satisfaction and adaptation of high technology throughout the sector, JCR Eurasia Rating maintains its „positive‟ outlook evaluation for the Turkish fleet leasing sector.

Intercity’s lease receivables generated by its well-reputed clientele improving with regard to concentrating within a shorter period of time and still supporting resiliency and predictability of the Company’s revenues albeit terms of contracts have been in a shortening path together with realization of expected improvement in main profitability indicators during FY2014 and notable continuation during FY2015, and indicators of capital adequacy level and liquidity profile exhibiting an improvement trend were the factors effective in the rating upgrades on the National Scale.

Obligations to arise through the bonds both issued during FY2015 amounting to TRY91 mn and planned to be issued during FY2016 - though the issue details have not been exactly determined yet - structured consistently on both maturity and currency terms with projected cash flows from the Company’s operations and increasing share of TRY denominated contract lease receivables together with the fact that the bond issue has been expected to have a very low share within the structure of its funding composition were assessed as the essential elements to curb issue risks in favor of investors.

JCR Eurasia Rating maintains its opinion that Intercity ensures financial assistance and effective operational support - as observed in such developments in the past as acquisition of funds from international financial markets in appropriate collateral structure - from the controlling shareholders having adequate financial strength, experience, willingness and propensity. However, no public authority and professional organization exist to provide the Company and the sector in general with financial support and liquidity and to eliminate the possible systemic risks to arise therein. In this respect, the Sponsor Support note of Intercity was affirmed at (2) - denoting a high level of support.

On the other hand, JCR Eurasia Rating is of the opinion that Intercity has the experience and facilities to manage the incurred risks on its balance sheet via its core business operations providing that its clients preserve their reputation and effectiveness in the market and the improvement in profitability indicators is maintained notwithstanding that the shareholders do not provide any assistance. Within this context of the Company’s established borrowing mechanisms despite limited market risk exposure resulting from floating-rate borrowings and increase in foreign currency position, maintenance of influence as the market leader, strengthened liquidity profile and initiation of efforts in the field of corporate governance practices together with existing needs for strengthening particularly transparency platforms regarding expansion of its stakeholder audience with respect to its magnitude reached, the Stand Alone note of Intercity was affirmed at (B) in the JCR Eurasia Rating notation system - denoting a strong profile with regard to profitability, balance sheet robustness, management, operational environment and expectations.

For more information regarding the rating results you may visit our internet site http://www.jcrer.com.tr or contact our analyst Mr. Zeki M COKTAN.

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