By Christine DiGangi, Credit.com
Using a credit card is one of the easiest ways to build your credit score, assuming you use it responsibly. The revolving-credit trade line will help you establish a pattern of payment behavior and credit use, which have the most influence on your credit score, and there are a few simple things you can do with your card to make sure youre building a strong credit score.
How to Get a Credit Card — and a Good Credit Score
Of course, you need a credit card to employ card-based credit-building strategies, and depending on your credit history and financial situation, you may have trouble getting one. If you have an idea of what your credit score is, you can search for credit cards matching your score, but there are a couple other things you can try, too.
1. Get a Secured Credit Card
Its easy to get a secured credit card, and unlike debit cards and prepaid cards, a secured card reports your use to credit bureaus and allows you to establish a payment and credit history.
Heres how they work: You pay a deposit (say, $500), and that becomes your credit limit. You can use the card as you would a regular credit card, spending within your limit and paying the bill. If you miss a payment, the issuer can take your deposit. Many secured cards carry an annual fee, and some allow you to graduate to a standard credit card, but youll want to explore those possibilities before you sign up for the card.
2. Piggyback on Someones Credit Card
If your mom, spouse, brother or someone else has a credit card with a great history, you can consider asking them to add you as an authorized user. It sounds simple — and it is, really — but its not the sort of strategy you should choose lightly. This goes for the person youre asking, too, because by adding you as an authorized user, theyll be risking their credit for no benefit other than the warm fuzzies they may feel when they decide to help you out. Warm fuzzies and credit card access are not a fair trade.
This isnt to say you shouldnt try the authorized user route; rather, you should take the opportunity to practice responsible credit card use and form good habits for when you can get a credit card on your own. Another option is to ask for someone to co-sign your credit card, but similar risks apply in this situation. Again, youre asking a lot of the other person.
Credit-Building Tips for Credit Card Users
If you already have a credit card, you can consider these few simple strategies that can help you build good credit.
1. Increase Your Credit Limit, Not Your Spending
If you have a solid history of paying your credit card bills, your issuer may grant you a credit limit increase. Often, you have to ask for the increase, and it will most likely result in a hard inquiry on your credit report, but your improved credit utilization rate will eventually outweigh the short-term drop in score (a result of the inquiry).
Heres the thing: You have to use a smaller percentage of your credit limit in order for this strategy to work. The easiest way to do that is by keeping your spending habits the same as your credit limit rises. If your limit was so low that you have flexibility to increase your spending, you can still improve your credit score — just make sure youre using a smaller share of your overall credit limit than you were before you got the higher limit.
2. Set Up Automatic Payments
With everything you have going on in your life, its easy to forget to pay a bill. Unfortunately, your credit score may not be forgiving if this happens, but if you set your credit card payments to automatically withdraw from your checking or savings account every billing period, youll never be late, and you dont have to remember to pay it.
You still need to stay on top of your payment schedule, because if you lose track and arent paying attention to your finances, you may overdraft your bank account, get hit with fees and end up missing the payment anyway.
3. Keep Your Cards Open
Often, your oldest credit card isnt necessarily your favorite, because as you build credit and qualify for cards with better perks, you have an incentive to use those instead. Still, you dont want to close that card and eventually lose the benefit of its old age. You can use the card for a small recurring payment (your streaming video service, a magazine subscription, a membership fee), and youll keep it active without having to spend too much. Set up an automatic payment for the card so you dont forget to pay for that small charge.
4. Make Multiple Payments
If you have a credit card you like to use but dont want to get too close to your credit limit, consider paying the balance several times a cycle. You can pay it after every transaction, if you really want. This way, when the card issuer reports to the credit bureaus, your credit card balance is likely to be much lower than it would if you only paid it once a cycle.
5. Be Patient
If you dont need a new credit card and you want your score to improve, dont apply for credit cards. Inquiries have a small impact on your credit score, but applying for credit sparingly will allow you to avoid losing a few points here and there for unnecessary inquiries.
Even though there are a few ways you can try and accelerate the process, it takes time to build credit. Credit cards can be one of the best ways to do so, and if you commit to using them properly, it can be worth the time you spend strategizing. To learn how your credit card use has helped (or hurt) your credit score, you can look at two of your credit scores for free on Credit.com.
This article originally appeared on Credit.com. Christine DiGangi covers personal finance for Credit.com. Previously, she managed communications for the Society of Professional Journalists, served as a copy editor of The New York Times News Service and worked as a reporter for the Oregonian and the News Record.
HANOI, Sept 30 (Reuters) – Credit for property and high-tech
industries prompted a surge in lending by Vietnams banks during
September, making the countrys annual target of 12-14 percent
absolutely reachable, according to the central bank governor.
Loan growth since the end of 2013 rose sharply from a
sluggish 4.5 percent at the end of August to 7 percent at
present, State Bank of Vietnam (SBV) Governor Nguyen Van Binh
told a parliamentary committee late on Monday.
Lending was slow due mainly to state debt, troubles in
processing assets used as collateral and failure to properly
promote a scheme aimed at helping businesses secure loans, Binh
said, according to the SBVs website (www.sbv.gov.vn).
The SBV wants to increase lending to stimulate an economy
propped up by manufacturing and exports, but constrained by
unresolved bad debt and weak consumer demand. Bankruptcies
remain rife and many Vietnamese do not qualify for loans or are
put off by prohibitively high interest rates.
Vietnams economic growth quickened in the third quarter
ending September to an annual increase of 6.19 percent, the
fastest pace since the fourth quarter of 2010, the government
said on Friday..
It estimated an expansion of 5.62 percent in the first nine
months of 2014, up from 5.14 percent in the same period last
Credit growth for high-tech enterprises and property, at 13
percent and 10 percent respectively, has outperformed other
sectors, Binh added.
Weak credit growth has prompted banks to boost investment in
government bonds, which grew nearly 22 percent from last year by
the end of August, the governor said.
Vietnams bonds have reached record prices in the second and
third quarters, driving down the yield on the one-year bond to
4.25 percent, or a fall of around 15 percent since late May.
JP Morgan predicted economic stability for Vietnam this
year, supported by external demand in the manufacturing sector
and better retail spending, with loan growth expected to rise
sharply in the final quarter.
Year-to-date credit growth is running well below the
official 12-14 percent target, though in past years has
accelerated significantly into year-end, it said in a client
note on Monday.
We expect this trend to repeat this year, supporting growth
momentum into year-end.
(Editing by Martin Petty and Prateek Chatterjee)
Rules eased on PLUS student loan program
A new regulation announced last week updates the definition of adverse credit history as it pertains to the federal PLUS loan program.
Underdeveloped credit system with its attendant failure to bolster demand for consumer goods and services has been identified as a major factor slowing insurance penetration in Nigeria.
Analysts say real intermediation by banks will encourage customers to seek for credit facilities that would require insurance cover. They add that the absence of this intermediation is adversely affecting insurance penetration in the economy.
Ope Oredugba, chairman, Claims International Limited, who spoke on the sidelines of a seminar on ‘Retail Insurance Business – A Begging Challenge’ in Lagos, said efforts must be geared towards reaching out to the emerging consumer group with the kind of products that would meet their development needs and also be reasonably affordable.
Other stakeholders who spoke at the seminar organised by HR Nigeria Limited, consultants and actuaries, said the credit market needed to be opened up to assist in bridging the penetration gap.
Nigeria’s insurance penetration, according to recent statistics, stands at an abysmal 6.5 percent, while its contribution to GDP is less than one percent with a population of over 170 million people. Though the current market penetration is extremely low, analysts say the demographic profile demonstrates a clear need for insurance and potential for market growth, which requires strategic efforts to unlock.
According to them, other markets within and outside Africa succeeding in insurance are strong in the offering of credit facilities to the populace, and this in itself creates an immediate need for insurance.
“Insurance provides support for mortgages, loans, car financing, as well as asset acquisition which do not only drive purchases; it also increases penetration for insurance and subsequently, economic growth,” said Jim Roth of Leapfrog Investments.
Roth further stressed the importance of understanding the “target market”, stating that compulsory insurances, mobile insurance as well as partnerships were distribution channels which succeeded in other markets.
They stated that credit in itself creates an immediate need for insurance, support for mortgages, loan acquisitions, car financing as well as asset buying, particularly household equipments.
Looking at other challenges bedevilling the insurance industry, they observed that there is a perceived lack of confidence in the insurance industry the key concern resonating being that “insurers do not pay claims”.
Beyond that, they also identified the lack of regulatory support for non-traditional distribution channels namely “corporate agents” for insurance eg mobile network providers and bancassurance.
This is important and needs the attention of the National Insurance Commission (NAICOM) to liase with the Central Bank of Nigeria (CBN), otherwise achieving penetration like other markets would be difficult, Wole Oshin, managing director, Custodian and Allied plc said.
Another successful approach undertaken by Leapfrog to improve the perception of trust of the insurer was by partnering with a well known, trusted non-insurance brand. He however faulted the traditional agency route of selling insurance, that is currently the major model here.
Though the regulator came under fire by many practitioners who felt that the best way to invoke change was by regulatory changes in particular in becoming less stringent on licensing of alternative distribution channels, George Onekhena stated that the commission was already looking at distribution, and may soon come up with a policy on the development.
Onekhena however stressed that a major challenge facing the development of the industry is premium leakages, calling for strategic efforts by operators to reach out to the mass of the uninsured public.
“Don’t forget that poverty is a major problem in our society and that many cannot afford to buy insurance, urging that a strategic effort to empower the populace would bring them closer to insurance, Onekhena stated.
YOUNGSTOWN, Ohio –
There are many websites that promise to provide you a credit report, but how do you differentiate between what is legitimate and whats not?
There are three places you can get one from: Experian, TransUnion, or Equifax, said Ken Vespasian, with Huntington Bank.
The Lunch and Learn series hosted by the YWCA allowed those who attended the opportunity to gain insight on how to build their credit history but also how to guard against identity theft.
How to look out for your credit score and how that impacts you. If you have a poor credit score, obviously you pay more for credit. As well as identity theft, people have to be on the watch for that, said Leah Brooks, YWCA Executive Director.
Your credit report is broken down into a two year span, and may simply have a number or an X to state whether your payment is on time. However, if you spot an error on your report, you can simply contact your bank who will set you up with the correct forms to send to the credit bureau.
I would highly recommend you do get your credit report checked every year. Not necessarily pay for the monitoring, but at least check it to make sure theres no mistakes, especially with all the hacking thats going on, said Vespasian.
Identity theft can be avoided by by keeping a close eye on your personal finances, or checking your credit report annually. If you think you are a victim of identity theft contact your bank or an identity theft hotline who may be able to freeze your account.
Federal regulators announced last week a handful of measures designed to help ease post-crisis mortgage-lending standards that some policy makers worry are too tight.
Just how much of an impact will they have? Most people who follow the sector closely don’t think they’ll have a big effect right away. The changes “had all the sizzle of a wet firecracker,” wrote Jay McCanless, who covers the housing sector for Sterne Agee. But that hasn’t stopped others from saying that the regulators want to bring back subprime mortgages.
So who’s right?
The answer is that the changes will ease standards at the margins, and in that sense, they mark an important shift. But so far, to say that these standards are bringing back any of the most problematic practices of the housing bubble is probably a stretch.
What was happening back then? Chiefly, lenders didn’t properly verify a borrower’s ability to make payments, especially for certain adjustable-rate loans that reset to higher payments. And lenders extended those loans with other risky features piled on top, making loans to borrowers with weak credit, borrowers with low down payments, and non-owner occupants. Often, loans had more than one of those risk factors.
Let’s look more closely at what changes have been proposed, and how much each one could loosen credit.
3% Down Payments
Fannie Mae and Freddie Mac , the government-chartered mortgage-finance companies, will restore a program that allows them to guarantee loans with down payments of low as 3%. Fannie discontinued its 3% down program last year, though it has continued to do some of these loans with state housing finance agencies.
Currently, both companies will guarantee loans with 5% down payments, and the Federal Housing Administration enables banks to make mortgages with just 3.5% down. It has insured hundreds of thousands of these loans in recent years.
There’s a common misperception that you need 20% down to get a mortgage, but that’s not quite right. Fannie and Freddie will accept mortgages with less than 20% down if the borrower has mortgage insurance. That insurance became harder to get after the crisis, but it didn’t disappear for borrowers with good credit. More than one-third of loans insured by Fannie and Freddie this year have had less than 20% down, and one-fifth have had less than 10% down.
How much will this loosen credit? It depends heavily on the yet-to-be-announced parameters for this program. Mortgage insurance companies may require better credit for borrowers with just 3% down, and Fannie and Freddie haven’t said yet what restrictions they might place on such a program.
Still, it’s unlikely that this change will dramatically expand the number of people who can buy a home, because the 3.5% down payment option has existed throughout the downturn from the FHA. Instead, it may make low-down-payment loans slightly less expensive, and it could help some people buy sooner than they otherwise would.
Nevertheless, the change has already raised eyebrows. Robert Toll, founder of home-builder Toll Brothers Inc., called the decision to accept 3% down payments a “really dumb-ass idea” last week.
Clarity on Put-Backs
For years, mortgage lenders have said that theyve kept standards tight because theyve been subject to billions of dollars of demands from Fannie and Freddie to repurchase defaulted mortgages that were later discovered to have underwriting defects.
Lenders say they should have to buy back loans with obvious frauds and misrepresentations. But they say the process sometimes includes foot faults–minor mistakes that didnt have had anything to do with the reason a loan went bad. To limit such put-back demands, theyve been far more cautious.
The new rules attempt to further clarify when loans can and can’t be put back. While the specific language isnt finished, the regulator of Fannie and Freddie, the Federal Housing Finance Agency, appears to be crafting agreements that won’t require lenders to take back loans if a lender’s mistake wasnt material to a default, or if a mistake wouldnt have changed Fannie or Freddie’s decision to guarantee the loan.
What effect will this have? The new guidance is designed to cut down on a loan application process that has lenders fixated on producing as much documentation as possible not necessarily to make a good credit decision, but to shield themselves against put-backs.
The hope is that this could eventually induce lenders to approve loans to borrowers with good but not perfect credit, such as those with credit scores in the mid-to-high 600s. (Typically, borrowers with credit scores below 620 are considered subprime; credit scores run on a scale from 300 to 850.)
“It is a mistake to look for any major impact from tinkering with rules at the margin,” wrote Jim Vogel, an analyst at FTN Financial. “And anything at all in the next six months? Very unlikely.”
For one, lenders have faced demands in recent years to repurchase loans made as long ago as the early 2000s. “The scars from put-backs remain deep,” said Mr. Vogel. “Although mortgage bankers may ‘sign on’ to the changes, that won’t indicate a new level of trust in a relationship that has shifted constantly against them for seven years.”
Moreover, put-backs are just one item on a growing list that risk managers have to worry about. Lenders face new consumer-protection rules that took effect this year and government officials have been threatening legal action while negotiating settlements over defaulted loans insured by the FHA.
Fannie and Freddie, in other words, aren’t the only places where banks “can be shredded for making a substandard loan,” said Mr. Vogel.
Risk Retention Rules
A separate group of regulators last week finalized a rule that’s part of the Dodd-Frank financial-overhaul law passed by Congress in 2010. The law requires issuers of asset-backed securities to effectively invest in a piece of those bonds in order to have more “skin in the game.” But the law also created a carve-out for certain mortgages.
The law left it up to six regulators to determine just which mortgages should be exempt from the rules. Last week, they finalized a rule that essentially adopts the same definition produced by a seventh regulator for a separate mortgage rule. Notably, they didn’t specify a down-payment requirement; their first proposal in 2011 included a 20% down-payment standard.
What effect will this have? Main Street won’t notice anything. True, the rule is more lenient than the one proposed in 2011. But that rule never took effect, so it’s impossible for this change to actually loosen standards.
And while some have worried that the more lenient rule has gutted the intent of the original proposal, the rule doesnt exempt many of the loans that were the most problematic during the bubble. An analysis from the Urban Institute shows that the majority of mortgages bundled into securities before the housing bust would be subject to the skin in the game requirements.
Why the Changes Matter
If each of these rules alone isn’t likely to result in immediate, sweeping changes, then why have they generated such a reaction?
First, they do signal important shifts in how regulators are managing the always-present tension between financial safety and access to credit. The changes show that regulators have grown far more concerned now about the latter–concerned enough to loosen some of the constraints that ratcheted up five years ago.
The rules could also take on greater urgency if incomes ever begin to rise as part of a broader economic upturn, particularly for younger households. If weak incomes and affordability problems are holding back homeownership, ultimately any easing of the credit dials will only go so far.
(Adds comment from Dutch central bank, ING statement)
AMSTERDAM Oct 26 (Reuters) – The European Central Banks
asset quality review resulted in a 3.8 billion euro ($4.8
billion) gross reduction in the asset value of seven Dutch
banks, mostly due to lower commercial real estate and corporate
No new capital will have to be raised by the banks, all of
which comfortably passed the stress test, the Dutch central bank
The net reduction of core tier 1 capital at the banks – ABN
Amro, BNG Bank, ING Bank, NWB Bank, Rabobank, RBS and SNS Bank –
was 2.8 billion euros, the central bank said.
The largest hit was to Rabobank, by 2.01 billion euros,
followed by 1.1 billion euros at ING Bank and 173 million euros
at ABN Amro.
Jan Sijbrand, a member of the Dutch central bank board, said
only 20 percent of the total reduction would be booked as
provisions by the Dutch banks, due to domestic accounting rules.
Rabobank said in a statement it had already taken provisions
for a substantial part of the assets reviewed and that it will
not have a material impact on the expected annual results.
ING Bank, which received a 10 billion euro state bailout
during the financial crisis, said in a statement it could now
move ahead with plans to make a final payment to the state of
1.025 million euros and reinstate dividend payments to
(1 US dollar = 0.7893 euro)
(Reporting By Anthony Deutsch)
CHICAGO–(BUSINESS WIRE)–Fitch Ratings has affirmed the ratings of Owens Corning (NYSE: OC),
including the companys Issuer Default Rating (IDR), at BBB-. The
Rating Outlook is Stable. A complete list of rating actions follows at
the end of this release.
KEY RATING DRIVERS
The ratings for OC reflect the companys leading market position in all
of its major businesses, strong brand recognition, and product,
end-market and geographic diversity. Risks include the cyclicality of
the companys end-markets and relatively weak credit metrics.
The Stable Outlook reflects Fitchs expectation that demand will grow
during the remainder of 2014 and into 2015 as the housing market
maintains its moderate recovery and commercial construction activity
improves from cyclical lows. The ratings and Stable Outlook also
incorporate OCs solid liquidity position.
STRONG MARKET POSITION
OC maintains a strong market position in all of its core businesses.
According to company estimates, OCs Roofing and Asphalt business is the
second-largest producer of asphalt roofing shingles in the United
States. The company also indicated that OC is the largest producer of
residential, commercial and industrial insulation and the second-largest
producer of extruded polystyrene foam insulation. Its Owens Corning PINK
FIBERGLAS insulation is a well-recognized brand name. OCs composites
segment is also a world leader in the production of glass fiber
OCs credit metrics are weak relative to the BBB- rating level.
Leverage as measured by Fitch-calculated debt-to-EBITDA was 3x for the
LTM period ending Sept. 30, 2014 compared with 2.7x at the end of 2013
and 3.4x at year-end 2012. EBITDA-to-interest was 6.5x for the Sept. 30,
2014 period compared with 6.7x at the end of 2013 and 5.4x at the end of
2012. The rating affirmation takes into account Fitchs expectation that
leverage will remain at or below 3x at the end of 2014 and during 2015
and interest coverage will exceed 6x during these periods.
SOLID LIQUIDITY POSITION
As of Sept. 30, 2014, OC had $51 million of cash and about $685 million
of borrowing availability under its $800 million revolving credit
facility that matures in 2018. Fitch expects OC will have continued
access to its revolver as the company has sufficient room within the
financial covenants required under the facility.
OC generated negative $100 million of free cash flow (FCF; cash flow
from operations less CAPEX and dividends) for the Sept. 30, 2014 LTM
period compared with $65 million in 2013, negative $2 million in 2012,
and negative $153 million in 2011. In February 2014, the company
initiated a quarterly dividend of 16 cents per share. Through the first
nine months of the year, OC paid $37 million in dividends.
Fitch projects OC will generate FCF amounting to approximately 1.5%-2.5%
of revenues in 2015. Fitch expects management will remain disciplined in
prioritizing the use of its cash and FCF by: continuing to invest in its
business; finance acquisition opportunities; and prudently return
capital to its shareholders. The company has no major debt maturities
until 2016, when $400 million of senior notes become due.
OC repurchased $44 million of stock under its share repurchase program
during the first nine months of 2014 – none during the third quarter of
2014 (3Q14). As of Sept. 30, 2014, OC had 7.7 million shares remaining
under its current authorization. Fitch expects the company will continue
with moderate annual share repurchases, financed primarily from FCF.
Fitch expects management will refrain from meaningful share repurchases
if there is significant deterioration in the companys operating
PRODUCT, GEOGRAPHIC AND END-MARKET DIVERSITY
OC operates in two product groups: Composites (34% of 2013 sales) and
Building Materials, which includes its Insulating Systems (30%) and
Roofing Products (36%). OC markets its products primarily to the
construction industry, with approximately 17% of the companys 2013 net
sales directed toward new residential construction, 22% derived from new
non-residential construction, 36% from the repair and remodel segment
(commercial and residential) and 25% from its international operations.
The companys activities in the US are also diversified with
manufacturing capacity across the country. This helps mitigate the
impact of the regional variability and cyclicality of the markets OC
participates in and somewhat lessens the volatility of its overall
CYCLICALITY OF END-MARKETS
OC markets its products primarily to the construction industry,
including new residential and commercial construction and the repair and
Fitchs housing estimates for 2014 are as follows: Single-family starts
are projected to improve 3% to 636,000 and multifamily volume to grow
about 17.5% to 361,000. Total 2014 starts should still approximate 1
million. New home sales are forecast to advance about 1.5% to 436,000,
while existing home sales volume is expected to decline 6% to 4.785
million, largely due to fewer distressed homes for sale.
Housing activity is likely to ratchet up more sharply in 2015 with the
support of a steadily growing economy throughout the year. The
unemployment rate should continue to move lower (averaging 5.8% in
2015). Credit standards should steadily ease moderately throughout next
year. Demographics should be more of a positive catalyst. More of those
younger adults who have been living at home should find jobs and these
25-35-year-olds should provide some incremental elevation to the rental
and starter home markets. Total housing starts are projected to expand
14% to 1.14 million as single-family starts advance 18% and multifamily
volumes gain 7%. New home sales should grow 18%, while existing home
sales rise 5%.
Fitch projects home improvement spending will increase 6% in 2014 and
grow at a similar pace next year. Spending for discretionary big-ticket
remodeling projects should continue to lag the overall growth in the
home improvement sector somewhat, as credit availability remains
relatively constrained and homeowners remain cautious in their spending.
However, there are signs that homeowners are a bit more willing to
undertake larger discretionary projects.
The fundamentals of US commercial real estate (CRE) continue to
improve at a moderate pace following the recent economic recession. CRE
vacancy rates are falling modestly and rents are moderately rising `as
the economy slowly picks up. Fitch currently expects continued, positive
property-level fundamentals across most asset classes and projects
private nonresidential construction will grow 8% in 2014 and 6% in 2015.
VOLATILITY OF OCs ROOFING BUSINESS
OCs roofing business has been rather volatile over the past five years.
For the first nine months of 2014, sales declined 11% and EBIT margins
are 670 basis points (bps) lower compared with the same period last
year. During 2013, sales were 2% lower compared with 2012 but EBIT
margins increased 320bps year-over-year. Roofing sales fell 7% in 2012
and EBIT margins declined 340bps. OC lowered its earnings guidance in
2012 due in part to a weaker environment for its roofing business and
the company also lowered its earnings guidance for 2014 during the
second quarter as a result of weaker-than expected roofing volumes.
While roofing demand is primarily driven by re-roof activity (about 75%
of demand, on average), new construction (18% of demand) and
storm-related activities (about 7% of market demand) have been quite
variable during the past 10 years.
The structure of the industry has changed in the past decade, becoming
more concentrated, with four competitors accounting for roughly 90% of
the asphalt shingle market. This compares with nine major competitors
sharing the market during the 1990s. While the industry generally
demonstrated pricing discipline during the past five to six years,
discounting was evident in 2012 and so far this year as shipments of
roofing shingles were weak. Manufacturers may continue to use pricing as
a lever to gain market share, as demand remains relatively weak.
Nevertheless, OCs consolidated operations have been relatively stable,
with reported consolidated EBITDA margins between 10.5% and 14.5% over
the past 10 years.
Future ratings and Outlooks will be influenced by broad economic and
construction market trends, as well as company-specific activity,
particularly FCF trends and liquidity.
OCs credit metrics are currently weak for the BBB- rating level.
Negative rating actions could occur if the recoveries in OCs
end-markets dissipates and affects volumes, and/or sustained materials
and energy cost pressures contract margins, leading to weaker than
expected financial results and credit metrics (including EBITDA margins
below 12%, debt to EBITDA consistently above 3.5x and interest coverage
beneath 5x for an extended period). Additionally, Fitch may consider a
negative rating action if management undertakes a meaningful share
repurchase program funded by debt, resulting in consistent
debt-to-EBITDA levels above 3.5x.
While Fitch does not currently anticipate a positive rating action in
the next 12-18 months, a positive rating action may be considered if the
company shows significant improvement in its operating results leading
to sustained improvement in credit metrics (particularly debt-to-EBITDA
levels below 2x and interest coverage above 7x), and maintains a robust
Fitch has affirmed the following ratings for OC with a Stable Outlook:
–IDR at BBB-;
–Senior unsecured debt at BBB-;
–Unsecured revolving credit facility at BBB-.
Additional information is available at www.fitchratings.com.
Applicable Criteria and Related Research:
–Corporate Rating Methodology (May 28, 2014).
Applicable Criteria and Related Research:
Corporate Rating Methodology – Including Short-Term Ratings and Parent
and Subsidiary Linkage
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CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
Cash Converters is hunting for acquisitions after the pawnbroking chain enjoyed a solid lift in quarterly revenues.
The franchises latest trading update shows revenue rose 26.2 per cent to $97.2 million in the September quarter, driven by rising demand for personal loans.
The personal loans business involves small cash advances and unsecured loans to customers.
Cash Converters loan book in Australia expanded by 23.4 per cent to $105 million in the quarter, with online personal loans doubling to $13.1 million.
The company expects strong demand for its loans to continue during its traditionally busy Christmas season.
This pleased investors, with Cash Converters shares closing nine cents higher, or nine per cent, at $1.09.
Managing director Peter Cumins says the companys financial performance has improved, with earnings before interest, taxes, depreciation, and amortization up 61 per cent.
In addition, we are considering opportunities across the Cash Converters network for further acquisitions, he said.
However, bad debt levels increased slightly to 7.2 per cent from 6.6 per cent in the previous three months.
Mr Cumins said this was within the historical range for the business.
The companys store network in the UK and Australia has seen revenue lift 15.4 per cent to $45.9 million in the first quarter compared to the same period a year ago.
n>(Reuters) – Boeing Co (BA.N) reported an 18 percent increase in quarterly profit and raised its full-year core earnings forecast for the third time, reflecting booming commercial aircraft demand and increasing profitability in its defense business.
But shares of the Chicago-based aerospace and defense giant slipped 4.3 percent, as analysts viewed the profit gain as a given and were more concerned that costs of the 787 Dreamliner are creeping higher, while the companys cash generation, a key measure for investors, was low.
Last year, Boeing blew past its cash forecast, booking $9.7 billion in operating cash flow before pension contributions, compared with a forecast of more than $8.5 billion.
But this year Boeing has a lower forecast of more than $7 billion, and in the first nine months has booked only $4.6 billion. For comparison, it had already booked $8.3 billion at the nine-month stage in 2013.
Wheres the cash? RBC Capital Markets Analyst Robert Stallard asked in the headline of a note to clients.
During a conference call with analysts and journalists, Boeing Chief Financial Officer Greg Smith said cash flow would be very strong in the fourth quarter. He didnt provide details, and Boeings official forecast rose to more than $7 billion from about $7 billion.
Smith also laid out some pretty clear operating reasons for why the 787 is not going to see a massive or rapid shift in cash returns over the next year or so, Stallard told Reuters. Boeing is stocking up on parts for its 787-9 model, and would try to do the same with the -10 variant, as a way to lower the risk of production snafus, and that will consume cash, Smith said.
The deferred production costs of the high-tech plane now appear likely to reach $26 billion, up from the $25 billion Boeing had forecast, analysts suggested. Smith didnt contest the number but said he didnt see the cost reaching $27 billion.
Boeing shares fell to $121.68 in afternoon trading on the New York Stock Exchange.
In the quarter ended Sept. 30, Boeing earned $1.36 billion, or $1.86 per share, up from $1.16 billion, or $1.51 per share, a year earlier.
Core earnings, which exclude some pension and other costs, rose to $2.14 per share from $1.80, easily topping analyst forecasts of $1.97, according to Thomson Reuters I/B/E/S. Revenue rose 7 percent to $23.78 billion.
Commercial aircraft operating margins narrowed to 11.2 percent from 11.6 percent, reflecting the effect of deliveries of lower-margin 787 and 747 aircraft, Boeing said.
For 2014, the company upped its core earnings forecast to $8.10 to $8.30 per share, from $7.90 to $8.10.
Sales fell 2 percent to $7.9 billion at Boeings defense, space and security business, reflecting continued pressure from government spending cuts. But Boeing boosted profit 27 percent and operating margins 2.4 percentage points by cutting costs.
(Reporting by Sweta Singh in Bangalore and Alwyn Scott in Seattle; Editing by Sriraj Kalluvila, Jonathan Oatis, Bernard Orr)