Johannesburg, 30 Jun 2014 — Global Credit Ratings has today affirmed the primary and special servicer ratings assigned to MBD Credit Solutions Holdings (Pty) Limited of SQ2+(ZA) and SQ1-(ZA) respectively; with the outlook accorded as Stable.
Global Credit Ratings has accorded the above credit rating(s) to MBD Credit Solutions Holdings (Pty) Limited based on the following key criteria:
Servicing experience: The group boasts a long history of servicing arrear loan accounts, both as administrator and principal collection agent (outsourced or for own account).
Experienced, tenured management and staff: a change in management, at the group and parent executive level, occurred during the period, albeit the positions were filled from within with equally experienced individuals, and with little disruption. The positive implications being that the group staff succession mechanism proved effective, while preserving the ongoing functioning of the business.
Robust internal control environment: the group upholds a good control environment through its management-level quality control reviews (on operational areas to ensure each functional area is performing as intended) and reporting.
Industry standard technology: the group uses industry standard servicing technology, accounting and reporting systems; overall, the technology infrastructure is deemed flexible, secure, stable and reliable (strong data integrity).
Financial condition: though posting another positive year, the group ended well behind expectations on income and asset growth, largely driven by deteriorating economic conditions and legislation changes, impacting consumers’ financial position/ability to service and/or settle accounts – reflected by an arduous collection experience. That all the same, the group’s financial strength and manageable near-term refinance risk support the ratings accorded, and shows an ability to sustain its operations and stay solvent.
Positive rating change/s: further progression in the group’s market positioning, trading performance, financial profile and portfolio collections track record (both principal and agency collections).
Negative rating change/s: lower than anticipated collections, lower business volumes due to the insourcing of collections by clients and the profit impact of legislation and/or regulatory burdens.
|NATIONAL SCALE RATINGS HISTORY||INTERNATIONAL SCALE RATINGS HISTORY|
|Initial rating (Mar/2011)||Last rating (Jun/2013)|
|Servicer quality: SQ2(ZA);||Primary servicer: SQ2+(ZA);|
|Outlook: Stable||Special servicer: SQ1-(ZA);|
Head: Financial Institution Ratings
Head: Corporate Ratings
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SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the rating was influenced by any other business activities of the credit rating agency; b.) the rating was based solely on the merits of the rated entity, security or financial instrument being rated; c.) such rating Was an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the rating is for a maximum of 12 months, or earlier as indicated by the applicable credit rating document.
MBD Credit Solutions Holdings (Pty) Limited participated in the rating process via face-to-face management meetings, teleconferences and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The credit rating/s has been disclosed to MBD Credit Solutions Holdings (Pty) Limited with no contestation of the rating.
The information received from MBD Credit Solutions Holdings (Pty) Limited and other reliable third parties to accord the credit rating included the latest available audited annual financial statements for March 2013 (plus four years of comparative numbers), most recent year to date management accounts up to February 2014, as well as detailed information related to the group, its subsidiaries and operations.
The ratings above were solicited by, or on behalf of, the rated client, and therefore, GCR has been compensated for the provision of the ratings.