Fitch Ratings announced the assignment of a long-term issuer rating of 'B-' with a stable outlook to the Uzbek leasing company MK Leasing FE LLC (MKL). Furthermore, its unsecured senior debt received a 'B-' rating with an RR4 recovery rating, indicating moderate recovery prospects.
These ratings reflect MKL's independent credit profile, which balances a concentrated business model and limited operational scale compared to international competitors on one hand, and a history of stable operations on the other.
MKL operates as an independent private leasing company in Uzbekistan and has been active there since 2019. By the end of 2025, the company ranked second nationally in new business volume and third in total leasing portfolio size.
The company specializes in medium-term leasing financing ranging from one to five years, with a weighted average contract term of approximately 35 months. By the end of 2025, micro and small enterprises accounted for about 80 percent of MKL's client base, while about 42 percent of transactions were with rural clients.
MKL's portfolio structure is gradually diversifying. In 2025, agriculture accounted for approximately 50 percent of the portfolio, up from 10 percent the previous year, alongside expanded presence in construction equipment, trucks, and commercial vehicles. Fitch notes that broader asset diversification over time may help reduce sector concentration, which currently limits the business profile alongside the firm's small scale.
Fitch identified MKL's operational efficiency in procurement and financing decision-making as a competitive advantage. Portfolio quality is supported by secured lease agreements and a historically low level of asset impairment. However, Fitch noted that the portfolio remains young, fast-growing, and concentrated.
The proportion of overdue lease payments exceeding 90 days was 2.2 percent by the end of 2025. Fitch attributed the low non-performing loan ratio to conservative initial down payment requirements and a weighted average loan-to-value ratio of about 70 percent.
Impairment expenses amounted to 3 percent of operating profit before impairment, and the risk cost—calculated as impairment expenses divided by average gross leasing—was 0.3 percent in 2025.
Profitability metrics remained high: pre-tax return on assets reached 9.3 percent in 2025 and averaged around 9 percent for the 2022–2025 period. This performance was sustained by a net interest margin of 10.8 percent and low impairment costs. Operating expenses relative to total net revenue were 41 percent.
Fitch expects a gradual slowdown in profitability as MKL expands into less profitable non-agricultural segments and replaces cheaper intra-group financing with more expensive domestic market financing.
By the end of 2025, MKL's capital stood at US$19 million. The total debt to tangible capital ratio decreased from 3.1 times the previous year to 2.5 times, and the equity to assets ratio reached 27 percent. Internal capital generation remained strong, evidenced by a retention rate of 37 percent in 2025. Fitch forecasts an increase in leverage as business expansion relies on borrowed funds, but expects it to remain at an acceptable level during 2026–2030.
MKL continues to diversify its funding base, reducing dependence on group debt from 88 percent to 71 percent of total borrowings by the end of 2025. In 2025, MKL executed its first local bond issuance totaling 50 billion soums (equivalent to US$4 million), with an additional issuance planned for 100 billion soums in 2026. The firm also secured its first international borrowing from impact funds.
MKL is wholly owned by Alternative, a securitization fund based in Luxembourg and managed by MK Global Kapital S.à r.l. This fund specializes in impact investing and alternative financing across more than 10 developing economies in Europe and Central Asia. The ultimate beneficial owner of Alternative is Joseph Arimatey, a private non-profit fund managed by a board of trustees.
Fitch assesses MKL's liquidity as adequately managed, supported by long-term borrowings and clients' willingness to make early lease payments.
A downgrade could occur due to significant deterioration in operational performance, an increase in non-performing leases, or a noticeable margin squeeze. Negative rating actions could also follow a sustained increase in the total debt to tangible capital ratio above 6.5 times, tightening covenant conditions, refinancing difficulties, liquidity strain, or unaddressed financing breaches.
Conversely, a rating upgrade would depend on further business scaling and client diversification without increasing business risks, expanding funding sources while maintaining solid financial performance, establishing a longer track record of profitable operations, and reducing market exposure, especially currency risk.
Regarding Environmental, Social, and Governance (ESG) factors, Fitch assigned MKL an ESG relevance score of 4 for environmental impact due to strong concentration in agriculture, which negatively affects the credit profile. Corporate governance also received a score of 4 due to significant decision-making dependence on a single shareholder.