S&P upgrades Eqstra

Standard & Poor's said it raised the long-term South Africa national scale ratings on Eqstra Holdings Ltd. to zaA- from zaBBB+ and affirmed its short-term rating at zaA-2.

The upgrade reflects a view of Eqstra's stronger financial performance from lower funding costs and improved revenues through the distributorship and industrial equipment divisions, S&P said.

This complements the improved funding structure and capitalization achieved in the past two years, the agency said.

The ratings are supported by good levels of capitalization, a strong local market position and customer franchise and a relatively diversified business profile for an operating leasing company, S&P said.

The ratings are constrained by the vulnerability of earnings and cash flow to domestic economic and commodity cycles, high counterparty concentrations and a reliance on wholesale funding with domestic bank concentration, the agency said.

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