JAKARTA: PT Sinar Mitra Sepadan Finance again appointed PT Andalan Artha Advisindo Sekuritas to serve as the arranger of Medium Terms Note (MTN) issuance, valuing IDR200 billion.Such appointment relates to the issuance of the bonds with 370 days maturities, said SMS Finance President Director Rudyanto Somawihardjo. Prior to this, AAA Securities has become the arranger of several SMS Finance MTN issuances as well as bonds I issuance in 2009.Later, the proceed will be used to back our car financing target, reaching IDR5 trillion in the end of this year, he told Bisnis last Monday.The company will still issue MTN although the long term rating and the rating of bonds I/2009 have been just downgraded from BBB+ (idn) to BBB(idn) by PT Fitch Ratings Indonesia this week.On this weeks rating research, Director of Fitch Ratings Indonesia Stefanus Yuniardhi also granted BBB(idn)(exp) expectation rating to the companys MTN issuance plan. The rating agency gives stable prospect with the short term note rating standing at F3 level(idn).Stefanus said that such downgrade is influenced by the declining asset quality along with the rising loan disbursement and weakening debt collection.The companys non performing loan also rose by 1.6% in the end of the first quarter 2011 compared to 0.8% in the end of 2009.Such declining asset quality is also tailed by rising loan expenses in the end of last year until the end of 1Q/2011. This reality somehow erodes profitability.Business shiftingThe rising NPL is attributed by a business shifting of its motorcycle unit to SMS Finances subsidiary, PT Central Sentosa Finance. Central Sentosa is jointly managed by SMS Finance and PT BCA Finance.Such business shifting has reduced the companys revenue and eroded the loan quality, as a result the companys total loan slumps and in the end raising the NPL.Nevertheless, at the moment, the companys loan quality has somehow improved as it is expected to reduce NPL to be below 1% in the end of this year.Our optimistic target is to make NPL standing below 1%, yet at least we expect to reduce NPL to be below 1.3% from 1.6% in the end of the year and the end of 1Q.2011.Besides, as he added, the company also plans to rise its capital thus the gearing ratio may decline from six times to 4-5 times. Such additional capital is excluded from the companys current capital, reaching IDR150 billion. SMS Finances current capital consists of IDR50 billion subordinated bonds. (t02/msw)

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