Fitch Revises Georgian Leasing's Outlook to Stable; Affirms at 'B+'

Fitch Ratings Inc., one of the "Big Three credit rating agencies," has revised Georgian Leasing Company Ltd's Outlook to Stable from Positive, while affirming the company's Long-Term Issuer Default Rating (IDR) at 'B+'. This follows a similar rating action on the parent bank - Bank of Georgia 

Fitch reports Georgian Leasing Company's IDRs and Support Rating are driven by support from Bank of Georgia (BoG, BB-/Stable). Fitch's view of probability of support is based on full ownership, close integration and a record of capital and funding support.

“The Georgian Leasing Company, which is 100%-owned by BoG, aligns its strategy and risk policies to those of its parent, although the company's management is independent in operational decisions. Georgian Leasing Company also benefits from access to some of BoG's systems, including risk management and IT/back-office functions,” says Fitch.

It also noted that a significant and sustained improvement of the company's performance and prospects, and a greater strategic alignment within the parent group would, in Fitch's view, increase BoG's propensity to support the company and could drive the equalization of the ratings with the parent.

Fitch reports that a material weakening of BoG's propensity or ability to support the company might result in a wider notching differential from the parent.

“This could be driven by an increase of support cost for BoG, a greater risk of regulatory restrictions on support, a waning of Georgian Leasing Company's strategic importance, or depletion of BoG's headroom (ie safety cushion) over regulatory required capital,” it added.

The rating actions are as follows: 

• Long-Term Foreign- and Local-Currency IDRs affirmed at 'B+'; Outlook revised to Stable from Positive
• Short-Term Foreign-Currency IDR affirmed at 'B' 
• Support Rating affirmed at '4'

By Thea Morrison