JCR Eurasia Rating has affirmed the credit ratings of Analiz Faktoring A.Ş. and “Cash Flows arising from Planned Bond Issuances” as ‘BBB+ (Trk)/Stable’ on the Long Term National Scale and ‘BBB-/Stable’ on the Long Term International Foreign and Local Curr

JCR Eurasia Rating has evaluated “Analiz Faktoring A.Ş.” and the “Cash Flows arising from Planned Bond Issues” in the investment grade category on a national and international scale in its periodic annual review and affirmed the rating on the Long Term National Scale as ‘BBB+(Trk)’ and the rating on the Short-Term National Scale as ‘A-2(Trk)’ and assigned “Stable” outlooks. On the other hand, JCR Eurasia Rating has also affirmed the Long Term International Foreign and Local Currency Ratings as ‘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

Long Term Issue Rating

: :

BBB+ (Trk) / (Stable Outlook)

BBB+ (Trk)

Short Term International Foreign Currency

:

A-3 / (Stable Outlook)

Short Term International Local Currency

:

A-3 / (Stable Outlook)

Short Term National Local Rating

Short Term Issue Rating

: :

A-2 (Trk) / (Stable Outlook)

A-2 (Trk)

Sponsor Support

:

2

Stand Alone

:

B

The Factoring Sector, meeting the funding and liquidity needs of companies, primarily Small and Medium Sized Enterprises (SMEs), has become an important part of the economic life in Turkey in accordance with the short-term nature of receivables in the trade sector and rising liquidity management needs of the market owing to the undertaken reforms and effective surveillance and supervision. The improved infrastructure and the obligation to establish risk measurement and internal control processes have made a positive contribution to the development of the sector’s corporate structure along with the increase in the quality, standardization and transparency of financial reporting and provision of fair competition. The sector is characterized by intense competitive conditions and the exhibition of a high level of vulnerability to macroeconomic uncertainty. Taking this and the Factoring Sector’s active involvement in daily market dynamics, inclusion in the Takasbank Money Market and generation of revenues principally from the real sector into account, the growth of the sector will depend on conjectural developments in the macro-economic field as well as new legal regulations, developments in the technological infrastructure, improvement in supplier finance and developments in export factoring.

The Company was established under the name ‘Asya Faktoring Anonim Şirketi’ in 2008 and has continued s operations under the trade name ‘Analiz Faktoring Anonim Şirketi’ from 2009. Despite the domination of the sector by bank-affiliated companies and the existence of intense competition throughout, the Company has maintained its above sector-average cumulative growth performance despite its small scale. Headquartered in Istanbul, the Company reached a large customer base in line with the increase in its branch network in the country’s important trade centers and sustained its healthy growth trend largely due to effective risk management practices and attainment of low NPL ratios.

The Company maintains its funding diversity through the realized past and ongoing successful bond issues in comparison to the sector with a weak propensity to obtain funding from capital markets through the issue of debt instruments. The equity level and principle profitability indicators exhibited an above sector average growth performance and lead to an upward acceleration in the Company’s internal equity generation capacity and lent support to the growth potential in the upcoming period. The high collateral level that supports asset quality and below sector average NPL ratios through effective risk management practices and the fundamental operating profitability provided by high interest margin made a positive contribution to the assignment of long and short-term ratings. In addition, the Company withstands market risks due to a balance sheet that does not carry foreign exchange risk. On the other hand, taking into account the fact that the funds supplied by factoring companies are largely provided by bank affiliated firms, the intense competitive conditions experienced by non-bank affiliated factoring companies, the pressures exerted on revenue generating capacity, asset quality and profitability ratios by the uncertainty of financial expenses stemming from the volatility of interest rates in bank loans and bonds, the market volatility brought about by domestic and foreign economic and political developments and the detrimental effect of sharp exchange movements and uncertainty on the financial structure of the real sector all continue to exert pressure on the sector’s asset quality. In addition, the presence of an experienced management team, a high level of capability to realize future growth strategies along with the ability of the generated internal resources and cash flows to meet interest payments on debt and cautious risk management practices have played an effective role in the affirmation of the Company’s long and short-term outlook as “Stable” and Long Term National Rating as ‘BBB+ (Trk)’. The resources planned to be raised from the debt issue will be carried within the Company’s balance sheet and as such no separate issue rating report will be documented and the resources have been analyzed within the current credit rating report. As the bonds to be issued has no differentiation in comparison to the Company’s other liabilities from a legal and collateralization perspective, the corporate credit ratings also reflect the Company’s issue ratings.

The developments of impaired receivables in the light of current sectorial deteriorations, the effects of the operating environment on the Company, the volatility of liquidity positions, the negative impact on capital adequacy that will be created by risks, and the effects of the developments in the real sector and market interest rates on the Company’s transaction volume, market share, profitability level, asset quality and debt structure are the major issues that will be kept under review by JCR Eurasia Rating.

Taking into consideration the contribution of planned investments to growth and profitability, the major controlling shareholders are considered to have the willingness and experience to ensure long-term liquidity and equity within their financial capability when required and to provide efficient operational support to Analiz Faktoring A.Ş. In this regard, the Company's Sponsor Support Grade has been affirmed as (2) in JCR Eurasia Rating’s notation.

On the other hand, regardless of the support that will be provided by the shareholders, taking into consideration the Company’s track record, market experience and effectiveness, organizational structure, asset size and quality, below sector average NPL ratio supported by effective risk management practices, strong collateralization level, equity level and ease of access to funding resources, an opinion has been reached that the Company has reached the level of infrastructure to manage the incurred risks on its balance sheet provided that it maintains its current customer base and market effectiveness along with the preservation of current macro-economic circumstances. Within this context, the Stand Alone grade of the Company has been affirmed as (B) in the JCR Eurasia Rating notation system, denoting an adequate level.

For more information regarding the rating results, you may visit our internet site http://www.jcrer.com.tr or contact our analyst Ms. Merve HAYAT.

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