Fitch cuts VKM Leasing to CC, negative view

Fitch Ratings said it downgraded CJSC VKM Leasing's long-term issuer default rating to CC from CCC and revised its outlook to negative from stable. Fitch said it also affirmed its short-term issuer default rating at C.

The action reflects deterioration in VKM Leasing's governance, following significant changes in the company's management and other key personnel, Fitch said, and higher credit and liquidity risks associated with reductions in the level of down payments required from lessees, the shortfall for which is financed by short-term bank loans.

VKM Leasing's small size, exceptionally high leverage, weak liquidity and concentrated business mean it is very vulnerable even to relatively minor shocks, although Fitch said that asset quality has been good to date.

The negative outlook reflects Fitch's concerns that the company's profile could deteriorate should its governance fail to improve.

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