JCR Eurasia Rating has affirmed the Long Term National credit ratings of “Sardes Faktoring A.Ş’’ and the “Cash Flow from Bond Issue’’ as ‘BBB(Trk)’ and the outlook as ‘Positive’ within the scope of periodic review. In addition, the Long Term International

JCR Eurasia Rating has affirmed the Long Term National credit ratings of “Sardes Faktoring A.Ş’’ and the “Cash Flow from Bond Issue’’ as ‘BBB (Trk)’ and the outlook as ‘Positive’ within the scope of periodic review. In addition, the Long Term International Foreign Currency and Local Currency Scale grade has been affirmed as 'BBB-/Stable’. Details 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

:

BBB (Trk) / (Positive outlook)

Long Term National Issue Rating

:

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

:

A-3 (Trk) / (Stable outlook)

Short Term National Issue Rating

:

A-3 (Trk)

Sponsor Support

:

3

Stand Alone

:

B

The Factoring Sector is marked by a high level of vulnerability to fluctuations in macroeconomic circumstances and instability. Management policies in the sector are strongly influenced by the changes in economic outlook and regulatory procedures from the Banking Regulation and Supervision Agency (BRSA). On the other hand, in line with the undertaken reforms, the sector’s legal infrastructure has been improved with regards to effective surveillance and control. As such, the mandatory installation of information, risk measurement and internal control systems have made a positive contribution to the improvement of the sector’s institutional set-up, and the quality, standardization and transparency of financial reporting practices and facilitated fair competition. Considering the fact that factoring companies generate revenues mainly from real sector firms, the probable adversities on the factoring sector of the market volatility and low-growth environment deriving from domestic/overseas economic, political and geopolitical developments serve as an issue that should be monitored closely.

“Sardes Faktoring A.Ş.”, which began activities in 2011, has a low market share in the domestic market and continues to meet the credit requirements of the companies and increase market awareness with its expert management staff in a factoring sector dominated by the banking and banking organizations. Sardes Faktoring, with a current equity level above the legal minimum, continues to manage its liquidity need by creating diversified funds through successful bond issuances and supports its profitability.

Operational support provided by an experienced management structure, realized successful bond issuances, satisfactory asset quality, expectation of improvement especially in profitability in the coming periods, feasibility of the budget targets for 2017 and the debt service capacity of the internally generated revenues and cash flows are the foundations of the rating affirmed by JCR Eurasia Rating. In addition, despite a high NPL ratio, the Company's ability to collect past-due receivables in 2017 is expected to increase based on the quality of the collateral structure of the overdue receivables protects asset quality with effective resource management, and they are the important factors of the long term national outlook affirmed as ‘’Positive’’. A separate rating report has not been compiled as the resources obtained from the bond issue will be carried on the Company’s balance sheet and was subject to analysis in the corporate credit rating report. The planned bond issue carries no difference in comparison to the Company’s other liabilities with respect to its legal standing and collateralization and as such the notations outlined in the corporate credit rating report also reflect the issue rating.

The actualization performance budget targets, sectoral developments and changes in interest rates affecting the Company's internal resource generation capacity, the trend of operational costs and asset quality and their impact on the ratings and outlook of are among the priority areas to be monitored by JCR Eurasia Rating.

It is considered that the major controlling shareholders, Emin Hakan Eminsoy , Kazım Cenk Tülümen and Celalettin Çağlar, 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 Sardes Faktoring A.Ş. Therefore, the Company's Sponsor Support grade has been affirmed as (3) in JCR Eurasia Rating’s notation.

On the other hand, taking into account the Company’s internal equity generation capacity, capitalization level and liquidity profile, we, as JCR Eurasia Rating, are of the opinion that Sardes Faktoring A.Ş. has reached the level of adequate experience and facilities to manage the its obligations regardless of any assistance from the shareholders, provided market efficiency and existing macroeconomic level in the market. Within this context, the Stand Alone grade of the Company has been affirmed as (B) in the JCR Eurasia Rating notation system.

For more information, related with the rating results you may visit our internet site http://www.jcrer.com.tr or contact our senior analyst Mr. Zeki Metin ÇOKTAN and asst. analyst Mr. Ersin KILIÇKAP.

JCR EURASIA RATING

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