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.
GTLK’s standalone creditworthiness is moderately stable. The Company’s standalone creditworthiness assessment (SCA) has been upgraded to reflect a significant improvement of the quality of its leasing portfolio.
According to ACRA’s estimates, in 2023 GTLK was a leader in terms of size of lease portfolio in the Russian Federation and the absolute leader in the leasing segments that are key for the Company, including railway, air, water and municipal transport.
ACRA has withdrawn the “Rating under review: developing” status on the credit ratings of GTLK and the bonds of GTLK and LLC “LAL-1520” and set the Stable outlook on the Company’s credit rating. The previous rating status was caused by the need for additional analysis of the situation related to it not being possible for Company’s subsidiaries (GTLK Europe DAC and GTLK Europe Capital DAC) to make coupon payments on Eurobonds in accordance with the issuance terms and conditions due to imposed sanctions. In December 2023, the Company issued substituting bonds within the Russian perimeter in accordance with the current laws.
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:
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GTLK plays an important role in the implementation of the state’s industrial and transportation development policy;
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The Company is the leader in the aviation, railway, water and ground transportation leasing segments and logistics infrastructure with regard to implementation of state and national programs;
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GTLK is among the systemically important organizations of the Russian economy and the systemically important organizations of the transport sector of the Russian Federation;
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The state, which owns a 100% stake in GTLK, exercises complete strategic and operational control over the Company;
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GTLK’s capital was formed through a series of capital injections from the state. The state is continuing to finance the Company: in 2022, the Company’s capital was increased again, in 2023, the Company received a concessional loan from the National Welfare Fund to finance certain projects in the transport industry.
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, it would have a relatively limited negative impact on the national economy and the social sector. This in turn may limit 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 concentration on the largest lessees is decreasing but it still constrains the business profile assessment. As of the end of 2023, the ten largest groups of lessees accounted for 56% of the lease portfolio, while the largest client’s share was 13% of the portfolio (58% and 16% a year earlier, respectively). Most of the lease portfolio is relatively evenly diversified between the rail, water and air transport segments.
Adequate capital adequacy assessment. Thanks to NWF’s long-term concessionary loan as well as profits earned last year, the Company’s capital adequacy ratio (CAR) grew in 2023 regardless an increase in assets. By the end of 2023, the CAR amounted to 15.1%, and ACRA does not expect the CAR to fall in 2024. At the same time, GTLK’s internal capital generation capacity remains low: the averaged capital generation ratio (ACGR) for 2019–2023 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.
High lease portfolio quality. A significant improvement of the Company’s lease portfolio quality is due to withdrawal of counterparties of GTLK’s ex-subsidiaries (GTLK Europe DAC and GTLK Europe Capital DAC) as those counterparties are unable to make payments due to sanctions. In addition, some of GTLK’s clients receive financing as part of state support measures, which facilitates a more loyal assessment of 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 September 30, 2023, the share of problem and potential problem debt in the Company’s current lease portfolio amounted to around 4%, while 90+ days overdue payments did not exceed 0.7% of the portfolio.
Balanced funding structure. The Company maintains a stably diversified funding structure. The Company’s non-budget funding includes bonds and bank loans. Bonds and loans accounted for 39% of the Company’s liabilities as of December 31, 2023. 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.
key assumptions
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Maintaining the current business model within the 12 to 18-month horizon.
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CAR at no lower than 11% within the 12 to 18-month horizon.
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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:
- Further significant increase in the 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:
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Loss of shareholder control by the Russian Federation, or lower propensity of the controlling shareholder to support the Company;
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Lower systemic importance of the Company for the state.
RATING COMPONENTS
SCA: bbb-.
Adjustments: none.
Support: state support, on par with the RF minus 3 notches.
issue ratings
JSC “GTLK”, series 002Р-01 (RU000A102VR0), maturity date: March 3, 2036, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, series 002Р-02 (RU000A105KB0), maturity date: November 17, 2037, issue volume: RUB 5 bln — АA-(RU).
JSC “GTLK”, series 001P-20 (RU000A1038M5), maturity date: May 28, 2036, issue volume: RUB 7 bln — AA-(RU)
JSC “GTLK”, series 001Р-19 (RU000A101SD8), maturity date: May 23, 2035, issue volume: RUB 5 bln — АA-(RU).
JSC “GTLK”, series 001Р-18 (RU000A101SC0), maturity date: May 23, 2035, issue volume: RUB 5 bln — АA-(RU).
JSC “GTLK”, series 001Р-17 (RU000A101QL5), maturity date: May 14, 2035 issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, series 001Р-16 (RU000A101GD3), maturity date: February 17, 2028, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, series 001Р-15 (RU000A100Z91), maturity date: October 21, 2025 issue volume: RUB 25 bln — АA-(RU).
JSC “GTLK”, series 001P-14 (RU000A100FE5), maturity date: May 25, 2034, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, series 001P-13 (RU000A1003A4), maturity date: January 20, 2034, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, series 001P-12 (RU000A0ZZV11), maturity date: November 4, 2033, issue volume: RUB 5 bln — АA-(RU).
JSC “GTLK”, series 001P-11 (RU000A0ZZAL5), maturity date: June 3, 2033, issue volume: USD 150 mln — АA-(RU).
JSC “GTLK”, series 001P-10 (RU000A0ZZ984), maturity date: May 20, 2033, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, series 001P-09 (RU000A0ZZ1J8), maturity date: March 18, 2033, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, series 001P-08 (RU000A0ZYR91), maturity date: January 18, 2033, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, series 001P-07 (RU000A0ZYNY4), maturity date: December 31, 2032, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, series 001P-06 (RU000A0ZYAP9), maturity date: September 1, 2032, issue volume: RUB 20 bln — АA-(RU).
JSC “GTLK”, series 001P-04 (RU000A0JXPG2), maturity date: April 6, 2032, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, series 001P-03 (RU000A0JXE06), maturity date: January 22, 2032, issue volume: RUB 10 bln — АA-(RU).
JSC “GTLK”, series 001P-02 (RU000A0JX199), maturity date: November 24, 2031, issue volume: RUB 7.78 bln — АA-(RU).
JSC “GTLK”, series ЗО24-Д (RU000A1077H3), maturity date: May 31, 2024, issue volume: USD 252.131 mln — АA-(RU).
JSC “GTLK”, series ЗО25-Д (RU000A1078V2), maturity date: April 17, 2025, issue volume: USD 292.09 mln — АA-(RU).
JSC “GTLK”, series ЗО26-Д (RU000A107AQ5), maturity date: February 18, 2026, issue volume: USD 303.644 mln — АA-(RU).
JSC “GTLK”, series ЗО27-Д (RU000A107B43), maturity date: March 10, 2027, issue volume: USD 346.639 mln — АA-(RU).
JSC “GTLK”, series ЗО28-Д (RU000A107CX7), maturity date: February 26, 2028, issue volume: USD 167.099 mln — АA-(RU).
JSC “GTLK”, series ЗО29-Д (RU000A107D58), maturity date: February 27, 2029, issue volume: USD 141.112 mln — АA-(RU).
JSC “GTLK”, series 002P-03 (RU000A107TT9), maturity date: February 02, 2039, issue volume: RUB 7.5 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 GTLK. Due to the absence of either structural or contractual subordination of the issues, ACRA regards them as pari passu to other existing and future unsecured and unsubordinated debt obligations of the Company. According to ACRA’s methodology, the credit rating of GTLK’s issues is equivalent to that of GTLK — AA-(RU). 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 issues of JSC “GTLK” and LLC “LAL-1520” 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 Financial Instruments under 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 bond issues of 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), June 15, 2021 (RU000A1038M5), December 5, 2022 (RU000A105KB0), November 22, 2023 (RU000A1077H3), November 27, 2023 (RU000A1078V2), December 06, 2023 (RU000A107AQ5, RU000A107B43), December 19, 2023 (RU000A107CX7, RU000A107D58), February 21, 2024 (RU000A107TT9). The credit rating of the bond issue of 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 bond issues of JSC “GTLK” (ISIN RU000A0JX199, RU000A105KB0, RU000A0JXE06, RU000A0JXPG2, RU000A0ZYAP9, RU000A0ZYNY4, RU000A0ZYR91, RU000A0ZZ1J8, RU000A0ZZ984, RU000A0ZZAL5, RU000A0ZZV11, RU000A1003A4, RU000A100FE5, RU000A100Z91, RU000A101GD3, RU000A101QL5, RU000A101SC0, RU000A101SD8, RU000A102VRO, RU000A1038M5, RU000A1077H3, RU000A1078V2, RU000A107AQ5, RU000A107B43, RU000A107CX7, RU000A107D58, RU000A107TT9) and LLC “LAL-1520” (ISIN RU000A101D54) are expected to be revised within one year from 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 were, 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.
