KUALA LUMPUR: Berjaya Corp Bhd's (BCorp) associated company Chailease Berjaya Credit Sdn Bhd (CBC) is expected to maintain its current double-digit annual growth rate with focused expansion on financing new motorcycles, said MARC Ratings Bhd.

Established as a non-bank financial institution, CBC - a 70:30 joint venture between Chailease Holding Co Ltd (CHC) and BCorp - is primarily involved in hire purchase financing of second-hand passenger cars and new motorcycles.

MARC said since commencing operations in the fourth quarter of 2015, CBC's financing portfolio had grown sharply at a compounded annual growth rate of 36.8 per cent from 2017 to 2021.

CBC's financing portfolio of RM1.9 billion stood at as at end-first half (1H) 2022, MARC said, in a statement on its prelimianry rating on CBC's RM1 billion bond issuance.

MARC has assigned a preliminary rating of AA-(cg) on CBC's proposed RM1.0 billion Medium-Term Notes programme, with a "Stable" rating outlook.

The rating agency said the programme carried an unconditional and irrevocable guarantee from CBC's ultimate holding company, CHC.

Meanwhile, MARC said rising interest rate environment coupled with inflationary pressures could pose headwinds to CBC's growth trajectory.

 "We note CBC's asset quality metric has remained broadly stable with its gross impaired financing ratio standing at a low 1.7 per cent as at end-1H 2022 (end-1H 2021: 1.6 per cent).

"That said, while CBC is susceptible to increases in delinquencies as its portfolio seasons, we draw comfort from its established underwriting and collection measures that have been adopted from the well-tested guidelines and policies of its Taiwan-based sister company, Chailease Finance Co Ltd, the main operating subsidiary of CHC.

"We also note that CBC has a healthy financing loss reserve coverage ratio of 194 per cent as at end-1H 2022," MARC added.