The credit rating of JSC “GTLK” (hereinafter, GTLK or the Company) is based on the very high likelihood of extraordinary support being provided by the state. The Company’s creditworthiness is assessed as high compared to other Russia-based issuers.
GTLK is a specialized leasing company focused on financial and operating lease of vehicles. Being an entirely state-owned company, GTLK is instrumental in the implementation of the state’s transportation development policy.
The Company’s standalone creditworthiness is moderately stable. The Company’s standalone creditworthiness assessment (SCA) has been improved due to a better assessment of the risk profile resulting fr om a decline in the share of potential problem debt in the lease portfolio.
According to ACRA’s assessments, in 2021 GTLK was the leader in terms of size of lease portfolio in the Russian Federation.
key assessment factors
Very high likelihood of extraordinary support from the state. In ACRA’s opinion, if necessary the state may provide long-term and short-term financing to the Company, as well as carry out capital injections, in view of the following factors:
-
GTLK plays an important role in the implementation of the state’s industrial and transportation development policy;
-
The Company is one of the leaders in the aviation, railway and water transportation leasing segments with regard to implementation of state and national programs;
-
GTLK is among the systemically important organizations of the Russian economy and the systemically important organizations of the transport sector of the Russian Federation;
-
The state, which owns a 100% stake in GTLK, exercises complete strategic and operational control over the Company;
-
GTLK’s capital was formed through a series of capital injections from the state. The state is continuing to finance the Company (a decision has been made to provide funding in 2022) during the period of economic and international instability.
ACRA assesses the likelihood of future capital injections for GTLK as high, taking into account its importance for the Russian transportation industry. At the same time, if the financial standing of the Company were to deteriorate, required budgetary injections would have a relatively limited negative impact on the national economy and the social sector. This in turn may lim it the amount and priority of support that the state is ready to provide to GTLK.
ACRA expresses its overall opinion on state support by setting GTLK’s final rating at parity with the Russian Federation minus three notches.
The adequate business profile assessment is based on GTLK’s very strong standing in the Russian leasing market and the aviation, railway and water transportation leasing segments. The factor’s assessment is limited by the consistent concentration of the Company’s lease portfolio on lessees. As of the end of 2021, the ten largest groups of lessees accounted for 63% of the lease portfolio, while the largest client’s share was 17% of the portfolio. Most of the lease portfolio is relatively evenly diversified between the rail, water and air transport segments.
Adequate capital adequacy assessment. A decline in business growth in 2021, as well as a capital injection, increased the capital adequacy ratio (CAR). As of the end of 2021, the CAR had grown to 12.6% compared to 11.6% as of the end of 2020. ACRA expects this trend to continue in 2022. At the same time, GTLK’s internal capital generation capacity remains low. The Company recorded a net profit of around RUB 1 bln in 2021. The averaged capital generation ratio (ACGR) for 2017–2021 continues to be negative. The Company’s profitability is strongly limited due to the implementation of non-commercial (concessionary) leasing programs. ACRA notes that the purposes of GTLK as an agent established to implement the state’s transportation policy do not require it to maintain high returns.
Satisfactory lease portfolio quality. The improved assessment of the risk profile, which was the reason for the Company’s higher SCA, is due to ACRA’s improved assessment of the Company’s lease portfolio quality. The share of contracts with payments 90+ days delinquent has declined in GTLK’s portfolio. A number of lessees who were recognized as potentially problematic in 2020 improved their indicators in 2021, and contracts were terminated with some of these clients. Some of GTLK’s clients receive financing as part of support measures carried out by the state, which also improves the quality of servicing their debt to GTLK. However, ACRA views this as a factor that is highly dependent on the state’s policy for supporting segments of the Russian transportation industry. As of December 31, 2021, the volume of problem and potential problem debt in the Company’s current lease portfolio amounted to around 6%.
Balanced funding structure. The Company maintains a stably diversified funding structure. The Company’s non-budget funding includes bonds and bank loans. Bonds accounted for 52% of the Company’s liabilities as of December 31, 2021. The Company’s dependence on certain lenders is assessed as acceptable.
Adequate liquidity position. Under ACRA’s base case scenario, the Company has positive cash reserves (the estimated current liquidity ratio is just above 1.0 within the 12-month horizon). The Company’s temporary structure of assets and liabilities is balanced. Under ACRA’s stress scenarios, GTLK’s need for emergency liquidity is moderate. In 2020–2021, the Company significantly increased its available cash reserves, which was positive in terms of passing through the period of economic stress in Q1 2022.
key assumptions
-
Maintaining the current business model within the 12 to 18-month horizon;
-
CAR at no lower than 11% within the 12 to 18-month horizon;
-
Maintaining the current funding structure.
potential outlook or rating change factors
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
- Increased systemic importance of GTLK resulting from growing state funding and higher involvement of the Company in the state’s transportation policy amid a stabilization of the economic situation in Russia.
A negative rating action may be prompted by:
-
Loss of shareholder control by the Russian Federation, or lower propensity of the controlling shareholder to support the Company;
-
Lower systemic importance of the Company for the state.
rating components
SCA: bb+.
Adjustments: none.
Support: state support, parity with the RF minus 3 notches.
issue ratings
JSC “GTLK”, 002Р-01 series (RU000A102VR0), maturity date: March 3, 2036, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, 001P-20 series (RU000A1038M5), maturity date: May 28, 2036, issue volume: RUB 7 bln — AA-(RU)
JSC “GTLK”, 001Р-19 series (RU000A101SD8), maturity date: May 23, 2035, issue volume: RUB 5 bln — АA-(RU).
JSC “GTLK”, 001Р-18 series (RU000A101SC0), maturity date: May 23, 2035, issue volume: RUB 5 bln — АA-(RU).
JSC “GTLK”, 001Р-17 series (RU000A101QL5), maturity date: May 14, 2035 issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, 001Р-16 series (RU000A101GD3), maturity date: February 17, 2028, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, 001Р-15 series (RU000A100Z91), maturity date: October 21, 2025 issue volume: RUB 25 bln — АA-(RU).
JSC “GTLK”, 001P-14 series (RU000A100FE5), maturity date: May 25, 2034, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, 001P-13 series (RU000A1003A4), maturity date: January 20, 2034, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, 001P-12 series (RU000A0ZZV11), maturity date: November 4, 2033, issue volume: RUB 5 bln — АA-(RU).
JSC “GTLK”, 001P-11 series (RU000A0ZZAL5), maturity date: June 3, 2033, issue volume: USD 150 mln — АA-(RU).
JSC “GTLK”, 001P-10 series (RU000A0ZZ984), maturity date: May 20, 2033, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, 001P-09 series (RU000A0ZZ1J8), maturity date: March 18, 2033, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, 001P-08 series (RU000A0ZYR91), maturity date: January 18, 2033, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, 001P-07 series (RU000A0ZYNY4), maturity date: December 31, 2032, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, 001P-06 series (RU000A0ZYAP9), maturity date: September 1, 2032, issue volume: RUB 20 bln — АA-(RU).
JSC “GTLK”, 001P-04 series (RU000A0JXPG2), maturity date: April 6, 2032, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, 001P-03 series (RU000A0JXE06), maturity date: January 22, 2032, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, 001P-02 series (RU000A0JX199), maturity date: November 24, 2031, issue volume: RUB 7.78 bln — АA-(RU).
LLC “LAL-1520”, P01-BO-02 series (RU000A101D54), maturity date: January 18, 2030, issue volume: RUB 35.6 bln — AA-(RU)
Rationale. The issues represent senior unsecured debt instruments of JSC “GTLK”. Due to the absence of either structural or contractual subordination of the issues, ACRA regards them as pari passu with other existing and future unsecured and unsubordinated debt obligations of the Company. According to ACRA’s methodology, the unsecured debt repayment level corresponds to the second category. Therefore, the credit rating of the issues is equivalent to that of JSC “GTLK”. The issue of LLC “LAL-1520” is guaranteed by a legal entity with a credit rating of AA-(RU).
regulatory disclosure
The credit ratings have been assigned to JSC “GTLK” and the bonds issued by JSC “GTLK” (ISIN RU000A0JX199, RU000A0JXE06, RU000A0JXPG2, RU000A0ZYAP9, RU000A0ZYNY4, RU000A0ZYR91, RU000A0ZZ1J8, RU000A0ZZ984, RU000A0ZZAL5, RU000A0ZZV11, RU000A1003A4, RU000A100FE5, RU000A100Z91, RU000A101GD3, RU000A101QL5, RU000A101SC0, RU000A101SD8, RU000A102VRO, RU000A1038M5) and LLC “LAL-1520” (ISIN RU000A101D54) under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Leasing Companies on the National Scale for the Russian Federation, Methodology for Analyzing Rated Entities Associated with a State or a Group, and the Key Concepts Used by the Analytical Credit Rating Agency Within the Scope of Its Rating Activities. The Methodology for Assigning Credit Ratings to Individual Issues of Financial Instruments on the National Scale for the Russian Federation was also applied to assign credit ratings to the above issues.
The credit rating of JSC “GTLK” was published by ACRA for the first time on June 28, 2017 and the credit ratings of the bonds issued by JSC “GTLK” were published by ACRA for the first time on July 25, 2017 (RU000A0JX199, RU000A0JXE06, RU000A0JXPG2), September 21, 2017 (RU000A0ZYAP9), January 23, 2018 (RU000A0ZYNY4), February 6, 2018 (RU000A0ZYR91), April 6, 2018 (RU000A0ZZ1J8), June 8, 2018 (RU000A0ZZ984), June 22, 2018 (RU000A0ZZAL5), November 23, 2018 (RU000A0ZZV11), February 7, 2019 (RU000A1003A4), June 11, 2019 (RU000A100FE5), October 28, 2019 (RU000A100Z91), February 27, 2020 (RU000A101GD3), May 29, 2020 (RU000A101QL5), June 9, 2020 (RU000A101SC0, RU000A101SD8), March 19, 2021 (RU000A102VRO), and June 15, 2021 (RU000A1038M5). The credit rating of the bond issued by LLC “LAL-1520” (RU000A101D54) was published by ACRA for the first time on January 31, 2020.
The credit rating of JSC “GTLK” and its outlook, as well as the credit ratings of the bonds of JSC “GTLK” (ISIN RU000A0JX199, RU000A0JXE06, RU000A0JXPG2, RU000A0ZYAP9, RU000A0ZYNY4, RU000A0ZYR91, RU000A0ZZ1J8, RU000A0ZZ984, RU000A0ZZAL5, RU000A0ZZV11, RU000A1003A4, RU000A100FE5, RU000A100Z91, RU000A101GD3, RU000A101QL5, RU000A101SC0, RU000A101SD8, RU000A102VRO, RU000A1038M5) and LLC “LAL-1520” (ISIN RU000A101D54) are expected to be revised within one year following the publication date of this press release.
The credit ratings were assigned based on data provided by JSC “GTLK”, information from publicly available sources, and ACRA’s own databases. The rating analysis was performed using the consolidated IFRS financial statements of JSC “GTLK” and the RAS financial statements of JSC “GTLK”. The credit ratings are solicited, and JSC “GTLK” participated in their assignment.
In assigning the credit ratings, ACRA used only information, the quality and reliability of which was, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided additional services to JSC “GTLK”, ACRA provided no additional services to LLC “LAL-1520”. No conflicts of interest were discovered in the course of credit rating assignment.
