Moody's assigns Ba1/NP foreign currency unsecured issuer ratings to Saudi Orix Leasing Company

The ratings reflect Saudi ORIX's developing franchise and its dependence on wholesale funding, but also its good financial fundamentals and strong expected external support.

Saudi ORIX is one of only two leasing companies operating in the Kingdom, and benefits from the expertise of its joint-venture partners (ORIX Corporation, Japan and ORIX Leasing
Pakistan Ltd) via a Technical Assistance Agreement, and is therefore well-placed to take advantage of the growth opportunities, driven by a booming local economy.

Nonetheless, the company's franchise is constrained by its small size and early stage of development, as well as
by competition from the local banks and dealers/suppliers who have their own finance operations.

The ratings further reflect Saudi ORIX's good overall financial fundamentals, underscored by a relatively well-diversified lease portfolio and good asset quality, while the high capital levels provide significant downside cushion against adverse events.

These strengths are however, offset by challenges in its funding profile, underscored by its dependence on wholesale sources of funding, while the aggressive balance sheet growth challenges risk management and may hide risks in deteriorating asset quality and capital levels.

Saudi ORIX's issuer rating is enhanced by expected external support if the company were to face difficulties. In our view, the catalyst factor is the fact that the Saudi Arabian Monetary Agency (SAMA) would be unwilling to allow its name to be associated with the failure of a financial institution that falls under its supervision.

SAMA is keen to protect its reputation, and although we appreciate that Saudi ORIX does not take deposits and is not important to the payment system, we believe that there is a high likelihood that SAMA would urgeThe Saudi Investment Bank -- as one of the major shareholders with a 28% stake -- to provide whatever support is necessary for the company to survive.

Headquartered in Riyadh, Kingdom of Saudi Arabia, Saudi ORIX Leasing Company reported total assets of SAR792 million (US$211 million) at June 2007.