Standard & Poor’s Ratings Services has announced its latest rating of Russian leasing company Element Leasing LLC as B-/Stable/C.

S&P said in a statement that the ratings reflect S&P's Ratings Services' view of the company's marginal asset quality and weak, but gradually improving profitability. S&P considers Element Leasing's wholesale funding profile to be intrinsically risky, as opposed to conventional deposit funding, which is not available for leasing companies in Russia. Moreover, its position as a small leasing company with a specialized business nature makes it more vulnerable to economic and market swings, in S&P’s view.

Positive rating factors include Element Leasing's currently strong capitalization, which S&P expects to decline to an adequate level; stable and professional management team, with a positive track record during the crisis; and strong business links to its direct owner, the Basic Element Group (not rated), one of Russia's largest financial and industrial groups.

With assets of RUB4.4bn (about $160m) on June 30, 2011, Element Leasing is a small Moscow-based leasing company. The company's leasing book is focused mainly on publishing equipment (24.4% of the total portfolio as of August 31, 2011) and on commercial trucks and construction machinery produced by GAZ Group (21% as of August 31, 2011), an Element Leasing affiliate through joint shareholder Basic Element.

Element Leasing forms part of Basic Element's financial services segment, along with Russian insurer Ingosstrakh Insurance Co. (BBB-/Stable/--; Russia national scale 'ruAA+'), and Bank Soyuz (B/Stable/C/--; Russia national scale 'ruA-'), where Basic Element holds a 49% stake. Basic Element is ultimately controlled by Oleg Deripaska, a Russian businessman.

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