Johannesburg, 21 November 2018 – Global Credit Ratings has placed the national scale ratings of A-(ZA) and A1-(ZA) accorded to Transaction Capital Limited in the long term and short term respectively; and its international scale local currency (LC) rating of BB- on Positive Watch.
The Positive Watch reflects the credit outlook on Transaction Capital Limited (“TC”, “the group”) based on our assumptions following the recent acquisition of a 25% equity stake in SA Taxi Finance Holdings Proprietary Limited (“SA Taxi”), a wholly owned subsidiary of TC, by South African National Taxi Council.
The Positive Watch allows a 3-6 month period for us to monitor the impact of the acquisition on SA Taxi’s credit profile. The acquisition is expected to raise c. R1.2bn and SA Taxi intends to use c. R1bn to settle external and shareholder debt, with the balance retained to fund business growth. We think that leverage will reduce substantially, improving capital adequacy as a result.
The Positive Watch also allows us to assess changing complexity of ownership/group structure and how it may impact the mobility of cash flows. A diverse shareholding is viewed broadly positive nonetheless.
|NATIONAL SCALE RATINGS HISTORY||INTERNATIONAL SCALE RATINGS HISTORY|
|Initial/last rating (November 2016)||Initial rating (November 2016)|
|Long-term: A-(ZA), Short-term: A1-(ZA)||International (LC): BB|
|Rating outlook: Stable||Rating outlook: Stable|
|Last rating (June 2018)||Last rating (June 2018)|
|Long-term: A-(ZA), Short-term: A1-(ZA)||International (LC): BB-|
|Rating outlook: Stable||Rating outlook: Stable|
|Simbarake Chimutanda||Matthew Pirnie|
|Credit Analyst||Sector Head: Financial Institution Ratings|
|(011) 784-1771||(011) 784-1771|
APPLICABLE METHODOLOGIES AND RELATED RESEARCH
Global Criteria for Rating Banks and Other Financial Institutions, updated March 2017
Global Criteria for Rating Finance and Leasing Companies, updated March 2017
TC rating report (2018)
RATING LIMITATIONS AND DISCLAIMERS
ALL GCR’S CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://GLOBALRATINGS.NET/UNDERSTANDING-RATINGS. IN ADDITION, GCR’S RATING SCALES AND DEFINITIONS ARE ALSO AVAILABLE FOR DOWNLOAD AT THE FOLLOWING LINK: HTTP://GLOBALRATINGS.NET/RATINGS-INFO/RATING-SCALES-DEFINITIONS. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, PUBLICATION TERMS AND CONDITIONS AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT HTTP://GLOBALRATINGS.NET.
SALIENT FEATURES OF ACCORDED RATINGS
GCR affirms that a.) no part of the ratings was influenced by any other business activities of the credit rating agency; b.) the ratings were based solely on the merits of the rated entity, security or financial instrument being rated; c.) such ratings were an independent evaluation of the risks and merits of the rated entity, security or financial instrument; and d.) the validity of the ratings is for a maximum of 12 months, or earlier as indicated by the applicable credit rating document.
Transaction Capital Limited participated in the rating process via management meetings and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The credit ratings have been disclosed to Transaction Capital Limited.
The information received from Transaction Capital Limited and other reliable third parties to accord the credit ratings included:
- Audited financial results of the group to 30 September 2017 (plus four years of comparative numbers);
- Interim financial results of the group to 31 March 2018;
- Latest internal and/or external audit reports to management;
- A breakdown of facilities available and related counterparties;
- Corporate governance and enterprise risk framework; and
- Information specific to the rated entity or industry.
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.
GLOSSARY OF TERMS/ACRONYMS USED IN THIS DOCUMENT AS PER GCR’S FINANCIAL INSTITUTIONS GLOSSARY
|Credit Rating||An opinion regarding the creditworthiness of an entity, a security or financial instrument, or an issuer of securities or financial instruments, using an established and defined ranking system of rating categories.|
|Debt||An obligation to repay a sum of money. More specifically, it is funds passed from a creditor to a debtor in exchange for interest and a commitment to repay the principal in full on a specified date or over a specified period.|
|Equity||Equity (or shareholders’ funds) is the holding or stake that shareholders have in a company. Equity capital is raised by the issue of new shares or by retaining profit.|
|International Scale Rating LC||International local currency (International LC) ratings measure the likelihood of repayment in the currency of the jurisdiction in which the issuer is domiciled. Therefore, the rating does not take into account the possibility that it will not be able to convert local currency into foreign currency or make transfers between sovereign jurisdictions.|
|Long-Term Rating||Reflects an issuer’s ability to meet its financial obligations over the following three to five year period, including interest payments and debt redemptions. This encompasses an evaluation of the organisation’s current financial position, as well as how the position may change in the future with regard to meeting longer term financial obligations.|
|National Scale Rating||Provides a relative measure of creditworthiness for rated entities only within the country concerned. Under this rating scale, a ‘AAA’ long term national scale rating will typically be assigned to the lowest relative risk within that country, which in most cases will be the sovereign state.|
|Short-Term Rating||An opinion of an issuer’s ability to meet all financial obligations over the upcoming 12 month period, including interest payments and debt redemptions.|
For a detailed glossary of terms please click here
GCR places Transaction Capital Limited’s ratings on Positive Watch