Fitch upgrades Carcade

Fitch Ratings said it upgraded Carcade LLC's national long-term rating to A(rus) from A-(rus) and the national rating on its senior debt to A(rus) from A-(rus). The agency affirmed its long-term foreign- and local-currency issuer default ratings at B+, short-term issuer default rating at B and senior debt at B+/RR4. The outlook is stable.

The upgrade reflects Fitch's view that the company has become a stronger credit within the B+ issuer default rating category. This in turn reflects greater diversification of the funding base and sound recent performance.

The agency said Carcade's long-term issuer default rating reflects the company's liquid lease book, which reasonably mitigates risks from a potentially volatile funding base; sound profitability due to solid margins and reasonable asset quality resulting from satisfactory lease contract terms and a rigorous collection function; and significant loss absorption capacity relative to historical loss rates.

However, the ratings also reflect Carcade's still narrow franchise and limited track record, the company's rapid growth and increasing leverage, the relatively concentrated funding base and ongoing and potential future margin compression as a result of increasing competition, Fitch said.

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