South African credit player Real People announces first-time Moody's rating

Real People recently received its first Moody's long-term investment grade rating of Baa3.za and a short-term rating of Prime-3.za.

In its ratings action release, Moody's described Real People's good IT and credit origination systems as one of the foundations of Real People's standing as a credit management group.

"Since its incorporation in 2001, Real People has built a good knowledge of the unsecured lending and credit management business, primarily based on good IT and credit origination systems, and its effective collection capabilities," said Moody's.

Moody's said that the first-time ratings reflect Real People's "small size and franchise, its focus on high-risk business segments, its vulnerable funding base and high level of non-performing loans but also its historically strong earnings base, good capitalisation buffer and good knowledge of the unsecured lending and credit management business".

Real People, headquartered in the Eastern Cape, has total assets of over R1 billion, and provides credit management services, in-store credit solutions for third-party clients, retail financial services, housing solutions, assurance and cellular products.

Real People managing director Bruce Schenk said: "We are very proud to have achieved this rating. The rating is important because it validates the strength of our business model."

Real People deputy managing director Neil Grobbelaar commented: "We believe this rating will add significantly to Real People's ability to raise capital in order to fund the ongoing growth of our business. It supports our view that although we operate in a segment of the market that is perceived as higher risk, these risks can be effectively managed by having the right management, systems and processes in place.

"We are confident that we will improve on the rating in the future, and are executing a number of strategies aimed at resolving some of the challenges identified by Moody's."

The Moody's ratings also noted that "the group's financial fundamentals are good and commensurate with a higher rating level, as these are reflected in its strong earnings power".