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Fitch Rates Georgian MFO Swiss Capital ‘B-‘

Fitch Ratings has assigned JSC Microfinance Organization Swiss Capital a Long-Term Issuer Default Rating of ‘B-‘. The Outlook is Stable.

Fitch has also assigned the company’s proposed local bond an expected senior unsecured ‘B-(EXP)’, aligned with the IDR.

The ratings of Swiss Capital reflect its business focus on consumer and micro lending in the high-risk Georgian operating environment, its rapid recent growth, and market and refinancing risks resulting from a concentrated funding profile with a high share of foreign currency. The ratings also reflect the company’s high risk appetite, which has resulted in large credit losses. Such losses are being compensated by wide interest rate spreads, while capitalisation is seen as a strength and should support future rapid growth.

The ratings are constrained by Swiss Capital’s mono-line business model, as the company is focused on consumer and micro lending in Georgia. The franchise is narrow as the company accounts for a low 5% of total microfinance sector assets, despite significant lending expansion in 2014-2017 (43% average loan growth).