Press Releases / 13.04.2016
Press Release as of 13.04.2016
AK&M Rating Agency has affirmed the national scale reliability rating of TCS-Accounting LLC at 'A+', revising the outlook from positive to stable.
The 'A+' rating indicates that the limited liability company Trewetch Corporate Services – Accounting maintains a high level of reliability. The risk of a failure to meet obligations in full and in time is insignificant.
The rating action reflects the capacity of TCS-Accounting LLC to fully and timely meet its obligations to maintain accounting and tax records of mortgage agents, i.e. special-purpose vehicles set up exclusively to acquire receivables on loans secured by mortgage, to later issue and service mortgage-backed debt securities (MBS).
The reliability rating of TCS-Accounting LLC is essentially supported by its sound position in the Russian mortgage asset securitization servicing market combined with fast business expansion, highly efficient accounting and tax records maintenance services provided to affiliated mortgage agents, and steady financial profile.
TCS-Accounting LLC continues expanding its business. Of special value is the broader cooperation with Russia's leading originator OJSC The Agency for Housing Mortgage Lending / AHML. The number of mortgage agents of this originator served by TCS-Accounting LLC increased from one in 2013 to three at the end of the first quarter of 2015. At the end of 2016, the amount of bonds issued by these mortgage agents (at the face value) reached almost RUB 39.6 billion or approximately 43% of the total securitized mortgage debt serviced by TCS-Accounting LLC.
Overall, in 2015 alone, the mortgage agents employing the services of TCS-Accounting LLC placed mortgage bonds for a total amount of RUB 52.8 billion, i.e. more than 50% above the amount placed in bonds for the previous four years. Furthermore, the mortgage agents employing the services of TCS-Accounting LLC alone accounted for the whole amount of internal off-balance mortgage debt securitization in the first quarter of 2015.
The mortgage agents employing the services provided by TCS-Accounting LLC are operating in full compliance with federal laws 152-FZ "On mortgage-backed securities", 39-FZ "On securities market" and other regulatory instruments issued by state administrative and supervisory bodies. The accounting records maintenance services provided to mortgage agents meet the applicable requirements, as proven by favorable audit opinions and absence of tax sanctions. Coupon and nominal principal payments on the mortgage bonds are effected on time and in full (meeting the respective terms of bond offering). Of special value is the successful completion of the first project CJSC Mortgage Agent of MBRD. The bonds issued by this mortgage agent were successfully retired ahead of schedule before the end of 2014 (the loan repayment deadline being 2038). The successful activity of the mortgage agents employing the rated Company's services contributes essentially to the reliability rating of TCS-Accounting LLC.
TCS-Accounting's financial profile may be regarded as fairly strong. In 2015, the Company's assets grew by more than half, equity capital went up more than 4.5 times, revenue increased 1.7 times, sales profit almost 4 times, net profit 3.1 times. Return on assets (ROA) ratio improved from 10.5% to 21.2%, return on equity (ROE) ratio from 92.9% to 183.2%. The Company's debt liabilities are mainly composed of accounts payable (mostly current obligations to mortgage agents pursuant to advances received and current payments to the parent company for using the trade mark). The Company's total net debt is below zero. Another positive rating driver is the Company's strong liquidity position; in 2015, its current liquidity ratio improved from 0.92 to 1.09, absolute liquidity ratio from 0.52 to 0.93. As a whole, the Company's current financial standing enables it to focus entirely on its core business of providing accounting and tax records maintenance services to mortgage agents. This strong foundation is of great importance, given the Company's ongoing business growth including the expansion beyond the mortgage securitization segment.
To a certain extent, the reliability rating of TCS-Accounting LLC is constrained by the continued deterioration of the Russian economy increasing the risks of transactions in the mortgage securities market.
TCS-Accounting LLC has been operating in the mortgage securitization market since 2009. Today, the Company provides accounting and tax records maintenance services to 22 mortgage agents including closed joint-stock companies Mortgage Agent of AHML 2011-1, Mortgage Agent of AHML 2014-2, Mortgage Agent of AHML 2014-3, Mortgage Agent SOYUZ 1, FEMLC-1 Mortgage Agent, Mortgage agent TFB1, Mortgage agent Vozrozhdenie 3, Mortgage Agent HFB-1, East-Siberian Mortgage Agent, Mortgage agent AkBars, Multi-originator Mortgage Agent 1. Besides, the Company provides operations support to five other corporate customers. Investment Company TREWETCH Investments Ltd registered in Cyprus owns 99% of the authorized capital of TCS-Accounting LLC. The Chief Executive Officer of TCS-Accounting LLC is Tatyana Kachalina, an internationally rated corporate law, capital market, project financing, securitization and M&A expert.
AK&M Rating Agency assigned a credit rating to TCS-Accounting LLC for the first time on April 19, 2013. The last rating action in relation to the Company was taken on April 16, 2015. All rating action announcements are available on the akmrating.ru website.
For estimation purposes, we completely rely on the reliability of information provided by the Company. The rationale for AK&M Rating Agency's judgment on the rating may include information acquired from other sources we deem to be reliable; however, the agency does not check the input data exhaustively and disclaims all responsibility for their possible errors.
This press release is based on the Statement of assignment of a reliability rating to TCS-Accounting LLC and the applicable Mortgage Servicer Rating Methodology.
The rating, along with any information and conclusions provided in this press release, only conveys our creditworthiness opinion and shall not be construed as a recommendation to purchase or sell securities, or to lend funds.
AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.
AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993. CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010) and is on the Central Bank of Russia's Register of Accredited Rating Agencies.
JSC Analysis, Consulting and Marketing Rating Agency
Ul. Gubkina 3, Moscow, Russia
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.