/raid1/www/Hosts/bankrupt/TCRAP_Public/241202.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
A S I A P A C I F I C
Monday, December 2, 2024, Vol. 27, No. 241
Headlines
A U S T R A L I A
CANN PHARMACEUTICAL: First Creditors' Meeting Set for Dec. 4
EQUITISE PTY: Second Creditors' Meeting Set for Dec. 4
FAR NORTHERN: First Creditors' Meeting Set for Dec. 4
GREENSILL CAPITAL: IAG Didn't Register Insurer with ASIC
KOALA CLOTHING: First Creditors' Meeting Set for Dec. 5
LIBERTY SERIES 2023-1: Moody's Ups Rating on Cl. F Notes from Ba3
PEPPER ASSET NO.1: Fitch Affirms 'Bsf' Rating on Class D Notes
PEPPER ASSET NO.3: Fitch Assigns 'Bsf' Final Rating on Cl. D Notes
B A N G L A D E S H
BANGLADESH: Moody's Lowers Issuer & Senior Unsecured Ratings to B2
[*] Moody's Takes Rating Action on 6 Bangladeshi Banks
C H I N A
CHINA VANKE: S&P Lowers ICR to 'B+' on Shrinking Balance Sheet
ZONGMU TECH: To Raise Funds to Restore Full Salaries by Year-End
H O N G K O N G
HEALTH AND HAPPINESS: S&P Affirms 'BB' ICR & Alters Outlook to Neg.
I N D I A
ADANI GREEN: S&P Affirms 'BB+' ICR & Alters Outlook to Negative
BALAJI INSTALMENTS: CRISIL Keeps B Debt Rating in Not Cooperating
CHARMS CHEM: CRISIL Keeps D Debt Ratings in Not Cooperating
DEEPAK CABLES: CRISIL Keeps D Debt Ratings in Not Cooperating
DUFLON INDUSTRIES: CRISIL Withdraws D Rating on INR4cr Cash Loan
GUPTA METAL: CRISIL Withdraws D Rating on INR75cr Cash Loan
LAXMI ENTERPRISES: CRISIL Keeps D Debt Ratings in Not Cooperating
NANGALI RICE: CRISIL Keeps D Debt Ratings in Not Cooperating
PRESTAR INFRA: CRISIL Keeps D Debt Ratings in Not Cooperating
RENEW ENERGY: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
RICE MILL: CRISIL Keeps B Debt Ratings in Not Cooperating
SHANTI NIKETAN: CRISIL Keeps D Debt Ratings in Not Cooperating
SHRIMATI POORNA: CRISIL Keeps D Debt Rating in Not Cooperating
SHYAM FIBERS: CRISIL Keeps D Debt Ratings in Not Cooperating
SIDDHI VINAYAK: CRISIL Keeps D Debt Ratings in Not Cooperating
SIDDHIDATA AGRO: CRISIL Assigns B+ Ratings to INR40cr Loans
SINGHAL AGENCIES: Ind-Ra Affirms BB+ Bank Loan Rating
STERLING AND WILSON: Ind-Ra Hikes Bank Loan Rating to BB
SUNSHINE INFRA: CRISIL Keeps D Debt Ratings in Not Cooperating
SYNDICATE JEWELLERS: CRISIL Keeps D Rating in Not Cooperating
TRIBHAWAN AND CO: CRISIL Keeps D Debt Rating in Not Cooperating
UDGEETH NIRMAN: CRISIL Keeps B+ Debt Rating in Not Cooperating
UGR SILOS: Ind-Ra Cuts Loan Rating to BB-, Outlook Negative
UKAY LUGGAGE: CRISIL Lowers Rating on INR6cr Cash Loan to B
ULTRA DENIM: CRISIL Keeps B Debt Rating in Not Cooperating
UNITED FORTUNE: CRISIL Keeps D Debt Ratings in Not Cooperating
UNNATI WRITING: CRISIL Keeps D Debt Ratings in Not Cooperating
V. G. SHIPBREAKERS: CRISIL Keeps D Ratings in Not Cooperating
V. P. M. SANKAR: CRISIL Keeps D Debt Rating in Not Cooperating
VEDANTA RESOURCES: Fitch Assigns 'B-' LongTerm Foreign Currency IDR
VERSATILE MOBILE: CRISIL Keeps D Debt Ratings in Not Cooperating
VIJAYA AERO: CRISIL Keeps D Debt Ratings in Not Cooperating
VISHNURAAM TEXTILES: CRISIL Keeps D Ratings in Not Cooperating
I N D O N E S I A
GAJAH TUNGGAL: Moody's Upgrades CFR & Senior Secured Notes to B2
VALE INDONESIA: S&P Raises LongTerm ICR to 'BB+', Outlook Stable
J A P A N
UNITIKA LTD: To Withdraw From Textile Biz in Turnaround Plan
M A L A Y S I A
PHARMANIAGA BHD: Bursa Malaysia Approves Regularisation Plan
M O N G O L I A
MONGOLIA: Moody's Upgrades Issuer & Senior Unsecured Ratings to B2
[*] Moody's Takes Rating Actions on 8 Mongolian Banks
N E P A L
NEPAL: Fitch Assigns 'BB-' LT Foreign-Currency IDR, Outlook Stable
N E W Z E A L A N D
FP IGNITION 2011-1: Moody's Assigns B3 Rating to NZD4.4MM F Notes
HERSHELL'S FOODS: Creditors' Proofs of Debt Due on Jan. 13
INNOVATIVE ROOFING: Court to Hear Wind-Up Petition on Dec. 6
INSIDE THE PROJECT: Creditors' Proofs of Debt Due on Dec. 21
LOWREY CONSTRUCTION: Court to Hear Wind-Up Petition on Dec. 5
Q CARD: Fitch Affirms Bsf Rating on Three Tranches, Outlook Stable
SOLARZERO NZ: Customers Likely Stuck in Lengthy Contracts
SOLARZERO NZ: Minister Seeks 'Urgent Advice' on NZD115MM at Risk
SUSTAINABLE FOODS: Creditors' Proofs of Debt Due on Jan. 22
TVNZ: Confirms Plans to Axe Roles but Quiet on Numbers
S I N G A P O R E
ALTERA INFRASTRUCTURE: Creditors' Proofs of Debt Due on Dec. 27
ARMADA 98/2: Moody's Ups Rating on Senior Secured Term Loan to B1
GRAB HOLDINGS: Moody's Hikes CFR to B1, Outlook Remains Positive
HARBORAIR LOGISTICS: Court Enters Wind-Up Order
HARBOUR HANDLERS: Court Enters Wind-Up Order
HONTOP ENERGY: Court to Hear Wind-Up Petition on Jan. 21
MAXEON SOLAR: Linden, 3 Others Cease Ownership of Ordinary Shares
URBAN RENEWABLES: Court to Hear Wind-Up Petition on Dec. 11
T H A I L A N D
DAOL SECURITIES: Fitch Lowers National LongTerm Rating to 'BB(tha)'
V I E T N A M
ANZ BANK (VIETNAM): Fitch Affirms ‘BB+’ Foreign Currency IDR
ASIA COMMERCIAL: Fitch Alters Outlook on 'BB-' LongTerm IDR to Pos.
HSBC BANK (VIETNAM): Fitch Affirms ‘BB+’ Foreign Currency IDR
MB SHINSEI FINANCE: Fitch Ups LongTerm IDR to 'B+', Outlook Stable
MILITARY COMMERCIAL: Fitch Affirms ‘BB’ Foreign Currency IDR
SAIGON THUONG: Fitch Affirms 'BB-' LongTerm IDRs, Outlook Stable
STANDARD CHARTERED: Fitch Affirms BB+ Foreign Currency IDR
- - - - -
=================
A U S T R A L I A
=================
CANN PHARMACEUTICAL: First Creditors' Meeting Set for Dec. 4
------------------------------------------------------------
A first meeting of the creditors in the proceedings of Cann
Pharmaceutical Partnership Pty. Ltd. will be held on Dec. 4, 2024
at 11:00 a.m. at the offices of WLP Restructuring at Suite 19.02,
Level 19, 1 Castlereagh Street in Sydney and by telephone and video
conferencing facilities via Microsoft Teams.
Alan Walker and Glenn Livingstone of WLP Restructuring were
appointed as administrators of the company on Nov. 22, 2024.
EQUITISE PTY: Second Creditors' Meeting Set for Dec. 4
------------------------------------------------------
A second meeting of creditors in the proceedings of Equitise Pty
Ltd has been set for Dec. 4, 2024 at 10:30 a.m. online via
Microsoft Teams.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by Dec. 3, 2024 at 4:00 p.m.
Mohammad Mirzan Bin Mansoor and Damien Mark Hodgkinson of Olvera
Advisors were appointed as administrators of the company on Oct.
31, 2024.
FAR NORTHERN: First Creditors' Meeting Set for Dec. 4
-----------------------------------------------------
A first meeting of the creditors in the proceedings of Far Northern
Contractors Pty. Ltd. will be held on Dec. 4, 2024 at 1:00 p.m. via
virtual meeting technology.
Cameron Shaw, Richard Albarran and Aaron Dominish of Hall Chadwick
were appointed as administrators of the company on Nov. 22, 2024.
GREENSILL CAPITAL: IAG Didn't Register Insurer with ASIC
--------------------------------------------------------
Jenny Wiggins at The Australian Financial Review reports that
Greensill Capital's key insurance agency did not have approval from
regulators to act as an insurer when it was half-owned by $20
billion group IAG, new court documents allege, as the ASX-listed
company gears up to defend $7 billion in claims.
The Financial Review relates that IAG, which is preparing for a
months-long trial starting in March 2026 in Sydney's Federal Court
to try to avoid paying out billions in policy claims related to the
2021 collapse of Lex Greensill's supply chain finance empire, has
been hit with new allegations in England's High Court.
A former Greensill Capital customer, US financier White Oak, has
disclosed new information related to IAG, which last week said it
would buy the insurance business of the RACQ for $855 million in an
expansion move that worries some investors, the Financial Review
relays.
Marsh, a US$94 billion broker listed on the New York Stock
Exchange, sourced insurance policies from Sydney-based Bond &
Credit Co (BCC) – the trade credit specialist half-owned by IAG
until mid-2019 – to protect Greensill Capital's customers.
According to the Financial Review, White Oak alleges in new court
claims against Marsh filed this month that BCC does not appear to
have been registered as an authorised representative of IAG's
ultimate parent, Insurance Australia Limited (IAL), with the
Australian Securities and Investments Commission register.
Instead, BCC was registered as a representative of IAG Agencies
between August 2017 and June 30, 2019, White Oak claims. BCC was
transferred to a new owner, Japanese insurer Tokio Marine, on July
1, 2019.
White Oak alleges that IAG Agencies did not have approval from the
Australian Prudential Regulation Authority to act as an insurer.
"Although IAL may have given authority to BCC to bind contracts on
IAL's behalf (i) this was never notified to ASIC as required by
law; and (ii) whilst BCC might have been an authorised
representative of both IAL and IAG Agencies, this required either
the consent of both, or for each to be a related body corporate,"
the documents, as cited by the Financial Review, said.
IAG said IAL was a licensed general insurer but declined to comment
on specific allegations. APRA said it authorised general insurers
and non-operating holding companies but did not authorise
underwriting agencies.
BCC's authority to write insurance is a crucial issue in the 10
lawsuits filed against IAG by Greensill Capital creditors in
Australia's Federal Court. IAL is named on many of the policies
taken out by Greensill Capital, the Financial Review notes.
About Greensill
Greensill was an independent financial services firm and principal
investor group based in the United Kingdom and Australia. It
offered structures trade finance, working capital optimization,
specialty financing and contract monetization. Greensill Capital
Pty was the parent company for the Greensill Group.
Greensill Capital (UK) Limited and Greensill Capital Management
Company (UK) Limited both entered into administration on March 8,
2021. Greensill Limited entered into Creditors' Voluntary
Liquidation on July 30, 2021. Greensill Capital Securities Limited
entered into Creditors' Voluntary Liquidation on June 24, 2022.
Greensill Capital Pty Limited was the parent company to the
Greensill Group of which Greensill Capital (UK) Limited and
Greensill Limited formed a part. It entered into administration in
Australia on March 9, 2021 and then subsequently into liquidation
in Australia on April 22, 2021.
KOALA CLOTHING: First Creditors' Meeting Set for Dec. 5
-------------------------------------------------------
A first meeting of the creditors in the proceedings of Koala
Clothing Australia Pty. Limited will be held on Dec. 5, 2024 at
11:00 a.m. at the offices of Jirsch Sutherland at Level 14, 383
Kent St in Sydney.
Andrew John Spring and Peter John Moore of Jirsch Sutherland were
appointed as administrators of the company on Nov. 25, 2024.
LIBERTY SERIES 2023-1: Moody's Ups Rating on Cl. F Notes from Ba3
-----------------------------------------------------------------
Moody's Ratings has upgraded the ratings on four classes of notes
issued by Liberty Series 2023-1 Auto.
The affected ratings are as follows:
Issuer: Liberty Series 2023-1 Auto
Class C Notes, Upgraded to Aa3 (sf); previously on Apr 10, 2024
Upgraded to A1 (sf)
Class D Notes, Upgraded to A2 (sf); previously on Apr 10, 2024
Upgraded to Baa1 (sf)
Class E Notes, Upgraded to Baa1 (sf); previously on Apr 10, 2024
Upgraded to Baa3 (sf)
Class F Notes, Upgraded to Baa3 (sf); previously on Apr 10, 2024
Upgraded to Ba3 (sf)
A comprehensive review of all credit ratings for the transaction
has been conducted during a rating committee.
RATINGS RATIONALE
The upgrades were prompted by an increase in note subordination
available for the affected notes and the good collateral
performance to date.
No action was taken on the remaining rated classes in the deal as
credit enhancement remains commensurate with the current ratings
for the respective notes.
Following the October 2024 payment date, the note subordination
available for the Class C, Class D, Class E and Class F Notes has
increased to 18.0%, 14.5%, 9.3% and 6.4% respectively, from 15.9%,
12.6%, 7.5% and 4.8% at the last rating action in April. Principal
collections have been distributed on a pro-rata basis among the
rated notes since the May 2024 payment date. Current total
outstanding notes as a percentage of the total closing balance is
56.6%.
The Guarantee Fee Reserve Account is currently fully funded to its
maximum balance of 2% of outstanding note balance.
As of end-September 2024, 3.3% of the outstanding pool was 30-plus
day delinquent and 1.8% was 90-plus day delinquent. The portfolio
has incurred 0.7% and 0.2% (as a percentage of the original note
balance) of gross and net losses to date, all of which have been
covered by excess spread.
Based on the observed performance to date and loan attributes,
Moody's have decreased Moody's expected default assumption to 5.0%
of the current note balance (equivalent to 3.5% of the original
note balance) from 6.0% of the current note balance (equivalent to
4.8% of the original note balance) at the time of the last rating
action in April 2024. Moody's have also decreased the Aaa portfolio
credit enhancement to 23% from 26% at the time of the last rating
action in April 2024.
The transaction is a securitisation of a portfolio of Australian
consumer and commercial auto loans, majority secured by motor
vehicles, originated by Liberty Financial Pty Ltd.
The principal methodology used in these ratings was "Moody's Global
Approach to Rating Auto Loan- and Lease-Backed ABS" published in
August 2024.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that could lead to an upgrade of the ratings include (1)
performance of the underlying collateral that is better than
Moody's expectations, and (2) an increase in the notes' available
credit enhancement.
Factors that could lead to a downgrade of the ratings include (1)
performance of the underlying collateral that is worse than Moody's
expectations, (2) a decrease in the notes' available credit
enhancement, and (3) a deterioration in the credit quality of the
transaction counterparties.
PEPPER ASSET NO.1: Fitch Affirms 'Bsf' Rating on Class D Notes
--------------------------------------------------------------
Fitch Ratings has upgraded one note class and affirmed four from
Pepper Asset Securities No. 1 Trust's pass-through floating-rate
notes. The Outlook is Stable. The transaction is backed by a pool
of first-ranking Australian automotive and equipment loan and lease
receivables originated by Pepper Asset Finance Pty Limited, a
subsidiary of Pepper Money Limited (Pepper). The notes were issued
by BNY Trust Company of Australia Limited as trustee for Pepper
Asset Securities No.1 Trust.
The upgrade of the class A1-a note to 'AA-sf', from 'A+sf', was
driven by the build-up of credit enhancement (CE) and the
transaction's stable asset performance.
Entity/Debt Rating Prior
----------- ------ -----
Pepper Asset
Securities No.1
Trust
A1-a LT AA-sf Upgrade A+sf
A1-x LT Asf Affirmed Asf
B AU3FN0083424 LT BBBsf Affirmed BBBsf
C AU3FN0083432 LT BBsf Affirmed BBsf
D AU3FN0083440 LT Bsf Affirmed Bsf
KEY RATING DRIVERS
Stable Asset Performance: Obligor default is a key input in its
quantitative analysis. The performance of the underlying assets is
in line with its base-case expectations set at closing. The 30+ and
60+ day arrears as of end-September 2024 were 1.8% and 0.8%,
respectively, in line with its 2Q24 Dinkum ABS Index arrears of
1.7% and 0.8%. Cumulative defaults and losses were 0.9% and 0.8%,
respectively. Cumulative recoveries were 18.4% below its base-case
recovery of 35%; actual recovery rates may be understated, as there
may be receivables that have defaulted but are yet to receive full
recoveries.
The assumptions used in this analysis reflect its updated default
and recovery expectations:
Non-novated Risk Grade A: 3.0% (5.50x)
Non-novated Risk Grade B: 8.5% (4.25x)
Non-novated Risk Grade C: 18.0% (3.00x)
Novated: 1.1% (7.75x)
The recovery base-case for electric vehicles (EV) is 24.0%, with a
'AAAsf' recovery haircut of 60.0% across all risk grades, and that
for non-EVs is 35.0%, with a 'AAAsf' recovery haircut of 50.0%. The
portfolio's weighted-average 'AAAsf' remaining loss rate, which
incorporates the updated base cases and the current portfolio
composition, has been revised to 19.1%, from 16.5% at closing.
Tight Labour Market Supports Outlook: Portfolio performance is
supported by Australia's continued economic growth and tight labour
market, despite rapid interest rate hikes in 2022-2023. GDP growth
was 1.0% for the year ended June 2024 and unemployment was 4.1% in
October 2024. Fitch forecasts GDP growth of 1.1% for the full year,
rising to 1.7% in 2025, with unemployment at 4.1%, increasing to
4.5%. This reflects Fitch's expectation that the effects of
restrictive monetary policy and persistent inflation will continue
to hinder domestic demand.
Limited Liquidity Risk: The updated cash flow analysis incorporates
Fitch's default and recovery expectations. The transaction is
paying principal sequentially, with the ability to switch to pro
rata pay down when pro rata criteria are satisfied. The CE provided
to each collateralised rated note through note subordination, along
with the liquidity reserve and retention amount, supports the
rating of the notes.
Low Operational and Servicing Risk: All receivables were originated
by Pepper Asset Finance, which demonstrated adequate capability as
originator, underwriter and servicer. Servicer disruption risk is
mitigated by back-up servicing arrangements. The nominated back-up
servicer is BNY Trust Company of Australia Limited. Fitch undertook
an operational and file review and found that the operations of the
servicer were comparable with those of other auto and equipment
lenders.
The key rating drivers listed in the applicable sector criteria,
but not mentioned above, are not material to this rating action.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Transaction performance may be affected by changes in market
conditions and the economic environment. Weakening asset
performance is strongly correlated with increasing levels of
delinquencies and defaults that could reduce CE available to the
notes.
Unanticipated increases in the frequency of defaults could produce
loss levels higher than Fitch's base case and are likely to result
in a decline in CE and remaining loss-coverage levels available to
the notes. Decreased CE may make certain note ratings susceptible
to negative rating action, depending on the extent of coverage
decline. Hence, Fitch conducts sensitivity analysis by stressing a
transaction's initial base-case assumptions. Fitch stresses the
recovery rate to isolate the effect of a change in recovery
proceeds at the borrower level.
Downgrade Sensitivity
Notes: A1-a / A1-x / B / C / D
Ratings: AA-sf / Asf / BBBsf / BBsf / Bsf
Rating Sensitivity to Increased Default Rates
Increase defaults by 10%: A+sf / BBB+sf / BBB-sf / BBsf / less than
Bsf
Increase defaults by 25%: Asf / BBBsf / BB+sf / B+sf / less than
Bsf
Increase defaults by 50%: BBB+sf / BBB-sf / BBsf / less than Bsf /
less than Bsf
Rating Sensitivity to Decreased Recovery Rates
Recoveries decrease 10%: AA-sf / BBB+sf / BBBsf / BBsf / less than
Bsf
Recoveries decrease 25%: A+sf / BBB+sf / BBBsf / BBsf / less than
Bsf
Recoveries decrease 50%: A+sf / BBBsf / BBB-sf / BB-sf / less than
Bsf
Rating Sensitivity to Combined Stresses
Defaults increase 10%/recoveries decrease 10%: A+sf / BBB+sf /
BBB-sf / BB-sf / less than Bsf
Defaults increase 25%/recoveries decrease 25%: A-sf / BBBsf / BB+sf
/ Bsf / less than Bsf
Defaults increase 50%/recoveries decrease 50%: BBBsf / BB+sf / B+sf
/ less than Bsf / less than Bsf
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade could result from macroeconomic conditions, loan
performance and credit losses that are better than Fitch's baseline
scenario or sufficient build-up of CE that would fully compensate
for credit losses and cash flow stresses commensurate with higher
rating scenarios, all else being equal.
Notes: A1-a / A1-x / B / C / D
Ratings: AA-sf / Asf / BBBsf / BBsf / Bsf
Reduce defaults by 10% and increase recoveries by 10%: AAsf / Asf /
BBB+sf / BB+sf / Bsf
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pools and the transactions. Fitch has not reviewed the results of
any third-party assessment of the asset portfolio information as
part of its ongoing monitoring.
Prior to the transaction closing, a third-party assessment of the
asset portfolio information was performed. Fitch sought to receive
it, but it was not made available to Fitch for this transaction. As
part of its ongoing monitoring, Fitch reviewed a small targeted
sample of the originator's origination files and found the
information contained in the reviewed files to be adequately
consistent with the originator's policies and practices and the
other information provided to the agency about the asset
portfolio.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis according to its applicable rating methodologies
indicates that it is adequately reliable.
ESG Considerations
Pepper Asset Securities No.1 Trust has an ESG Relevance Score of
'4' for Energy Management, which has a negative impact on the
credit profile and is relevant to the ratings in conjunction with
other factors. The score is higher than the baseline ESG Relevance
Score of '2' (no impact) for this general issue in the Australian
auto sector. This is because there is limited credit performance
data for EVs and available market data show notable differences in
recoveries between EVs and non-EVs. Fitch's analytical approach for
the transaction, in which EVs form 15% of the pool, was not
adjusted purely due to the green nature of the underlying
collateral, but Fitch references available market data for EVs to
determine its recovery assumptions.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
PEPPER ASSET NO.3: Fitch Assigns 'Bsf' Final Rating on Cl. D Notes
------------------------------------------------------------------
Fitch Ratings has assigned final ratings to Pepper Asset Securities
No.3 Trust's pass-through floating-rate notes. The notes are backed
by a pool of first-ranking Australian automotive and equipment
lease and loan receivables originated by Pepper Asset Finance Pty
Limited, a subsidiary of Pepper Money Limited (Pepper). The notes
were issued by BNY Trust Company of Australia Limited as trustee
for Pepper Asset Securities No.3 Trust.
This is a whole loan sale, where the trustee acquired all of the
seller trustee's rights, title and interest in the receivables
using funds provided by the investors under a whole loan
pass-through structure. All notes and units are held by investors.
Entity/Debt Rating Prior
----------- ------ -----
Pepper Asset
Securities No.3 Trust
A1-a LT NRsf New Rating NR(EXP)sf
A1-x LT NRsf New Rating NR(EXP)sf
B AU3FN0093860 LT BBBsf New Rating BBB(EXP)sf
C AU3FN0093878 LT BBsf New Rating BB(EXP)sf
D AU3FN0093886 LT Bsf New Rating B(EXP)sf
G AU3FN0093902 LT NRsf New Rating NR(EXP)sf
Transaction Summary
The total collateral pool at the 31 October 2024 cut-off date was
AUD500 million and consisted of 10,451 receivables with
weighted-average (WA) seasoning of 11.1 months, WA remaining
maturity of 57.6 months and an average contract balance of
AUD47,842.
KEY RATING DRIVERS
Stress Commensurate with Ratings: Fitch has assigned base-case
default expectations and 'AAAsf' default multiples as follows:
Novated: 1.10% (7.75x)
Non-Novated Risk Tier A: 3.00% (5.50x)
Non-Novated Risk Tier B: 8.50% (4.25x)
Non-Novated Risk Tier C: 18.00% (3.00x)
The recovery base case for electric vehicles (EVs) is 24.0%, with a
'AAAsf' recovery haircut of 60.0% across all risk grades, and that
for non-EVs is 35.0%, with a 'AAAsf' recovery haircut of 50.0%. The
WA base-case default assumption was 4.34% and the 'AAAsf' default
multiple was 4.67x.
Portfolio performance is supported by Australia's continued
economic growth and tight labour market, despite rapid
interest-rate hikes in 2022-2023. GDP growth was 1.0% in the year
ended June 2024 and unemployment was 4.1% in October 2024. Fitch
forecasts GDP growth of 1.1% for the full year, rising to 1.7% in
2025, with unemployment at 4.1% and increasing to 4.5% next year.
This reflects Fitch's expectation that restrictive monetary policy
and persistent inflation will continue to hinder domestic demand.
Excess Spread Limited by Commission Note Repayment: The transaction
includes a class A1-x note to fund the purchase-price component
related to the unamortised commission paid to introducers for the
origination of the receivables and a premium. The note will not be
collateralised, but will amortise in line with an amortisation
schedule. The note's repayment limits the availability of excess
spread to cover losses, as it ranks senior in the interest
waterfall, above the class B to G notes.
The class A to G notes will receive principal repayments pro rata
upon satisfaction of stepdown criteria. Other structural features
include a reverse turbo mechanism that redirects available excess
income to repay note principal, and a loss reserve that is
initially funded by note issuance at closing and traps excess
income on or before the third payment date, which is available for
loss reimbursement. Fitch's cash flow analysis incorporates the
transaction's structural features and tests each note's robustness
by stressing default and recovery rates, prepayments, interest-rate
movements and default timing.
Counterparty Risks Addressed: Counterparty risk is mitigated by
documented structural mechanisms that ensure remedial action takes
place should the ratings of the swap providers or transaction
account bank fall below a certain level.
Low Operational and Servicing Risk: All receivables were originated
by Pepper Asset Finance, which demonstrated adequate capability as
originator, underwriter and servicer. Pepper is not rated by Fitch.
Servicer disruption risk is mitigated by backup servicing
arrangements. The nominated backup servicer is BNY Trust Company of
Australia Limited. Fitch undertook an operational and file review
and found that the operations of the originator and servicer were
comparable with those of other auto and equipment lenders.
No Residual Value Risk: There is no residual value exposure in this
transaction. However, 39.8% of the portfolio by loan value,
including all novated leases, has balloon amounts payable at
maturity.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Transaction performance may be affected by changes in market
conditions and the economic environment. Weakening asset
performance is strongly correlated with increasing levels of
delinquencies and defaults that could reduce credit enhancement
(CE) available to the notes.
Downgrade Sensitivities
Unanticipated increases in the frequency of defaults and decreases
in recoveries on defaulted receivables could produce loss levels
higher than Fitch's base case, and are likely to result in a
decline in CE and remaining loss-coverage levels available to the
notes. Decreased CE may make certain note ratings susceptible to
negative rating action, depending on the extent of the coverage
decline. Hence, Fitch conducts sensitivity analysis by stressing a
transaction's initial base-case assumptions; these include
increasing WA defaults and decreasing the WA recovery rate.
The rating sensitivity section provides insight into the
model-implied sensitivities the transaction faces when assumptions
- defaults or recoveries - are modified, while holding others
equal. The modelling process uses the modification of default and
loss assumptions to reflect asset performance in up and down
environments. The results should only be considered as one
potential outcome, as the transaction is exposed to multiple
dynamic risk factors.
Notes: B / C / D
Rating: BBBsf / BBsf / Bsf
10% defaults increase: BBB-sf / BB-sf / less than Bsf
25% defaults increase: BB+sf / B+sf / less than Bsf
50% defaults increase: BBsf / less than Bsf / less than Bsf
10% recoveries decrease: BBB-sf / BBsf / less than Bsf
25% recoveries decrease: BBB-sf / BB-sf / less than Bsf
50% recoveries decrease: BBB-sf / B+sf / less than Bsf
10% defaults increase/10% recoveries decrease: BBB-sf / BB-sf /
less than Bsf
25% defaults increase/25% recoveries decrease: BBsf / Bsf / less
than Bsf
50% defaults increase/50% recoveries decrease: B+sf / less than Bsf
/ less than Bsf
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Economic conditions, loan performance and credit losses that are
better than Fitch's baseline scenario or sufficient build-up of CE
that would fully compensate for credit losses and cash flow
stresses commensurate with higher rating scenarios, all else being
equal.
Upgrade Sensitivities
Notes: B / C / D
Rating: BBBsf / BBsf / Bsf
10% defaults decrease/10% recoveries increase: BBB+sf / BB+sf /
B+sf
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch sought to receive a third-party assessment conducted on the
asset portfolio information, but none was made available for this
transaction.
As part of its ongoing monitoring, Fitch reviewed a small targeted
sample of the originator's origination files and found the
information contained in the reviewed files to be adequately
consistent with the originator's policies and practices and the
other information provided to the agency about the asset
portfolio.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis, according to its applicable rating methodologies,
indicates that it is adequately reliable.
ESG Considerations
Pepper Asset Securities No.3 Trust has an ESG Relevance Score of
'4' for Energy Management, which has a negative impact on the
credit profile, and is relevant to the ratings in conjunction with
other factors. The score is higher than the baseline ESG Relevance
Score of '2' (no impact) for this general issue in the Australian
auto sector. There is limited credit performance data for EVs, and
available market data show notable differences in recoveries
between EVs and non-EVs. Although Fitch's analytical approach for
the transaction, in which EVs form 9% of the pool, was not adjusted
purely due to the "green" nature of the underlying collateral,
Fitch referenced available market data for EVs in determining its
recovery assumptions.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
===================
B A N G L A D E S H
===================
BANGLADESH: Moody's Lowers Issuer & Senior Unsecured Ratings to B2
------------------------------------------------------------------
Moody's Ratings has downgraded the Government of Bangladesh's
long-term issuer and senior unsecured ratings to B2 from B1 and
affirmed short-term issuer ratings at Not Prime. The outlook has
been changed to negative from stable.
The downgrade reflects heightened political risks and lower growth,
which increases government liquidity risks, external
vulnerabilities and banking sector risks, following the recent
political and social unrest that led to a change in government.
Ongoing political uncertainty and weakening growth lead Bangladesh
to rely increasingly on short-term domestic debt to finance its
deficit, raising liquidity risks. Additionally, higher risks to
asset quality amplify structurally weak capital and liquidity in
the banking system, increasing contingent liability risks for the
sovereign. Despite improving remittance flows and loan
disbursements from development partners, external vulnerability
risk remains weaker due to a sustained decline in the reserve
buffer over the past years. With elevated social risks, the absence
of a clear election roadmap, the deterioration of law and order,
and the nascent reemergence of community-based tensions also raises
political risk.
The negative outlook reflects downside risks to Bangladesh's growth
outlook beyond Moody's current expectations, which could further
strain the country's already weak fiscal position and exacerbate
external vulnerabilities. These risks stem from weaker domestic
demand and supply disruptions due to recent protests and
disruptions to law and order that cloud the export outlook and
lower prospects for the ready-made garments sector. While the
interim government remains committed to a broad reform agenda, its
capacity to execute remains uncertain. Furthermore, the political
capital to push through challenging reforms could diminish if the
interim government cannot swiftly deliver outcomes, including
taming inflation and addressing high unemployment.
Bangladesh's local-currency (LC) and foreign-currency (FC) ceilings
have been lowered to Ba3 and B2 from Ba2 and B1, respectively. The
LC ceiling is placed two notches above the sovereign rating,
reflecting weak predictability and reliability of government
institutions and high external imbalances, which raise risks for
the garment export sector's contributions to government revenue;
balanced by a relatively small government footprint. The FC ceiling
is placed two notches below the LC ceiling, reflecting low capital
account openness, weak policy effectiveness, and some degree of
unpredictability surrounding capital flow management, but taking
also into account a low external indebtedness.
RATINGS RATIONALE
RATIONALE FOR THE DOWNGRADE TO B2
Political risk has increased following the recent social unrest
that led to the resignation of former Prime Minister Sheikh Hasina
and the subsequent introduction of an interim government led by
Nobel laureate Muhammad Yunus. While economic activity has largely
normalized under the interim government, political uncertainty
punctuated by occasional lapses in law and order, weakens domestic
demand and weighs on activity in the ready-made garment sector.
Together with the impact on agricultural production from recent
floods, Moody's have lowered Moody's growth projections to 4.5%
from 6.3% for FY2025 (from July 01, 2024 to June 30, 2025) and to
5.8% from 6.0% for FY2026. Execution risk for reforms under the
current IMF program has increased, while the lack of a clear
election roadmap introduces uncertainty around the longer-term
commitment to reform. Furthermore, political capital to push
through challenging reforms could diminish if the interim
government cannot swiftly meet social demands, including taming
inflation and addressing high unemployment.
Political uncertainty and weakening growth increase risks related
to government liquidity, banking sector and external
vulnerabilities. Given the liquidity constraints in recent years,
the government has increasingly relied on short-term borrowing
through treasury bills, which will account for more than 40% of the
total gross financing needs for FY2025, up from 20% in FY2023. With
ongoing monetary tightening, the yields on treasury bills increased
rapidly to around 12% at the end of October 2024, up from
approximately 11.5% in April 2024 and 9.8% in October 2023. Higher
yields rapidly translate in an overall higher cost of debt given
the shortening debt maturity. Furthermore, with fiscal revenues at
a very low level relative to the size of the economy, debt
affordability will likely weaken further, especially as revenue
mobilization reform is expected to remain challenging in a
weakening growth environment.
Vulnerabilities in the banking sector have also increased, given
the expectation for higher problem loans due to the political and
economic disruptions, which raises contingent liability risks for
the sovereign. Moody's expect a material portion of loans to
politically connected borrowers under the Sheikh Hasina regime will
default through the year, adding to existing structural weaknesses
in the banking system. This is likely to increase the fiscal cost
of banking sector reform, which the government is currently
reviewing with the IMF.
Despite the narrowing of Bangladesh's current account deficit,
supported by robust remittance flows and import restrictions,
pressures on the country's external position persist due to a
sustained decline in its reserve buffer. The foreign-exchange
reserves stood at $19.8 billion as of October 2024, about 3.2
months of import cover, down from $21.7 billion in June 2024.
Moody's now expect reserves to reach approximately $20 billion by
the end of 2024 and only improve in 2025 with disbursements from
the IMF and other development partners. Consequently, Moody's
external vulnerability indicator (EVI) — the ratio of external
debt payments and foreign currency deposits to foreign exchange
reserves — has weakened to 91% at the end of 2024 from 63% from
at the end of 2023, albeit remaining at moderate levels. Heightened
political risk and payment delays to energy suppliers will continue
to exert pressure on the reserve buffers.
RATIONALE FOR THE NEGATIVE OUTLOOK
The negative outlook reflects downside risks to Bangladesh's growth
outlook beyond Moody's current expectations, which could further
strain the country's already weak fiscal position, exacerbate
external vulnerabilities and government liquidity. The risk of
further deterioration in law and order, fueled by challenging
social conditions and on-going political uncertainty, cloud the
outlook for the ready-made garments sector and exports. There are
further downside risks to Moody's growth forecasts as the full
economic impact of social unrest and supply disruptions remains
uncertain.
Inflation will remain elevated, prompting Bangladesh Bank to
maintain a tight monetary policy stance, which will likely weigh on
consumption. Given that inflationary pressures are largely driven
by supply-side factors, such as supply chain disruptions and high
domestic food prices, Moody's expect monetary policy effectiveness
to be limited. This is further compounded by the structurally weak
policy transmission mechanism in Bangladesh.
While Moody's baseline assumes gradual recovery in ready-made
garment sector and that its competitiveness will underpin the
country's medium-to-long-term growth prospects, it may face greater
challenges as buyers look to divert garment orders to neighboring
countries in light of the political uncertainty and Bangladesh's
graduation from UN's LDC (least developed countries) status in
2026, which will gradually reduce access to concessional financing
and preferential export market access.
ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Bangladesh's ESG Credit Impact Score of CIS-5 reflects very high
exposure to environmental and social risks, and weak governance
which, together with low financial capacity, constraint the
sovereign's ability to adjust to environmental and social risks.
Moody's assess Bangladesh's E issuer profile score at E-5 given as
a low-lying country with large coastal areas, Bangladesh is highly
prone to flooding, which disrupts economic activity and raises
social costs. Low incomes and weak infrastructure quality compound
the impact of weather-related events on the economy, and in turn,
associated fiscal costs. In addition, the magnitude and dispersion
of seasonal monsoon rainfall also influence agricultural sector
growth, generating some volatility and raising uncertainty about
rural incomes and consumption. As a net energy importer, exposure
and risks related to carbon transition are not present.
Moody's assess Bangladesh's S issuer profile score at S-5 given low
incomes stem in part from physical and social infrastructure
constraints to economic development that will take time to address.
That said, per capita incomes have grown strongly over the past
decade and poverty rates have declined sharply, thanks to high and
stable economic growth. This has also delivered improvement in
access to basic services, although Bangladesh's challenges related
to improvements in educational opportunities and outcomes, health
and safety, and labor force inclusion remain areas of social risk.
Bangladesh's weak institutions and governance profile constrain its
rating, as captured by G issuer profile score at G-4. Challenges in
control of corruption and rule of law weaken existing institutions,
while the credibility of legal structures is also limited. These
governance challenges have in part contributed to asset quality
issues in the banking sector. Besides, a deteriorating monetary
policy framework undermines macroeconomic stability, while
challenging fiscal prudence.
GDP per capita (PPP basis, US$): 8,494 (2023) (also known as Per
Capita Income)
Real GDP growth (% change): 5.8% (2023) (also known as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): 9.7% (2023)
Gen. Gov. Financial Balance/GDP: -4.6% (2023) (also known as Fiscal
Balance)
Current Account Balance/GDP: -1.1% (2023) (also known as External
Balance)
External debt/GDP: 21.7% (2023)
Economic resiliency: ba3
Default history: No default events (on bonds or loans) have been
recorded since 1983.
On November 12, 2024, a rating committee was called to discuss the
rating of the Bangladesh, Government of. The main points raised
during the discussion were: The issuer's economic fundamentals,
including its economic strength, have materially decreased. The
issuer's institutions and governance strength, have not materially
changed. The issuer's fiscal or financial strength, including its
debt profile, has not materially changed. The issuer's
susceptibility to event risks has not materially changed.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
WHAT COULD CHANGE THE RATINGS UP
Given the negative outlook, an upgrade is highly unlikely in the
near future. However, Moody's would consider revising the outlook
back to stable if Moody's had a higher level of confidence in a
recovery in the economy and broad political stability that would
shore up the country's external position and government liquidity.
Moody's would also revise the outlook to back to stable if
pressures on Bangladesh's external position were to ease durably
that would lead to rebuilding of foreign exchange reserves to
adequate levels.
Additionally, an accelerated and successful implementation of
reforms, particularly those addressing weaknesses in the banking
sector, enhancing external liquidity, and bolstering institutional
capacity, could also prompt us to change the outlook back to
stable.
WHAT COULD CHANGE THE RATINGS DOWN
Conversely, Moody's would likely downgrade the ratings if Moody's
concluded that the deterioration in Bangladesh's growth outlook
exceeds Moody's current expectations and denotes structurally
weaker growth that weaken other aspects of Bangladesh's credit
profile. In particular, such a scenario would, in turn, further
worsen fiscal and external metrics and elevate government liquidity
risks with an enduring erosion of foreign exchange reserves and
uncertainty surrounding financing sources. Political instability
that delays or derails progress on structural reforms would also
exert downward rating pressures.
The principal methodology used in these ratings was Sovereigns
published in November 2022.
[*] Moody's Takes Rating Action on 6 Bangladeshi Banks
------------------------------------------------------
Moody's Ratings has taken rating actions on following six
Bangladeshi banks:
(1) BRAC Bank PLC. (BRAC)
(2) City Bank PLC. (CBP)
(3) Dutch-Bangla Bank PLC. (DBBP)
(4) Eastern Bank PLC. (EBP)
(5) Mercantile Bank PLC. (MBP)
(6) Premier Bank PLC. (The) (PBP)
Moody's have downgraded BRAC's long-term (LT) local currency (LC)
and foreign currency (FC) deposit ratings to B2 from B1. Moody's
have also downgraded MBP's and PBP's LT LC and FC deposit ratings
to B3 from B2 and affirmed the B2 LT LC and FC deposit ratings of
CBP, EBP and DBBP.
At the same time, Moody's have changed the outlooks on the LT
deposit ratings of all six banks to negative from stable.
RATINGS RATIONALE
The rating action follows the downgrade of the Government of
Bangladesh's sovereign rating to B2 from B1 with a negative
outlook.
The sovereign credit strength is a key input in Moody's bank
ratings because the country's credit strength affects the
government's capacity to support banks in times of stress. The
sovereign downgrade reflects heightened political risks and lower
economic growth, which increases government liquidity risks,
external vulnerabilities and banking sector risks, following the
recent political and social unrest that led to a change in
government.
Moody's have updated the banking system's macro profile to Very
Weak+ from Weak-, prompted by the sovereign downgrade and
deteriorating operating conditions within the banking sector. Over
the past year, depositor and investor confidence in the banking
sector has significantly declined, influenced by concerns over
corporate governance, limited transparency and inadequate financial
safeguards. Moody's anticipate that the central bank's initiative
to enhance asset quality recognition will cause a near-term surge
in non-performing loans (NPLs) but contribute to greater systemic
stability.
Despite the increased risks to asset quality, the funding and
liquidity of most rated banks have remained largely stable.
DOWNGRADE OF BRAC'S RATINGS
The downgrade of BRAC's LT deposit ratings to B2 from B1 and its
Baseline Credit Assessment (BCA) to b2 from b1 is driven by the
sovereign rating downgrade, given the strong linkages between the
bank and the sovereign, including its large direct exposure to
government debt and the two entities' exposure to common underlying
operating conditions. Despite the downgrade, BRAC's credit
fundamentals remain solid and stronger than other rated Bangladeshi
banks. Moody's expect BRAC's funding and liquidity will continue to
benefit from flight to quality because of the turbulence in the
banking sector.
AFFIRMATION OF CBP'S, EBP'S AND DBBP'S RATINGS
The affirmation of CBP's, EBP's and DBBP's B2 LT deposit ratings
and b2 BCAs reflects their stable capital and funding, moderate
profitability and improving liquidity, despite rising asset risks.
Despite the banks' funding and liquidity improvement during the
year, a larger-than-expected increase in NPLs will pressure their
credit fundamentals.
DOWNGRADE OF MBP'S AND PBP'S RATINGS
The downgrade of MBP's and PBP's LT deposit ratings to B3 from B2
and their BCAs to caa1 from b3 reflects the banks' deteriorating
financial fundamentals, driven by worsening asset quality because
of their significant loan concentration to risky borrowers, their
weakened profitability, modest loss absorbing buffers and growing
contingent liabilities. The LT deposit ratings incorporate a
one-notch uplift to reflect Moody's expectation of a moderate
probability of support from the government in times of need.
The rating action on PBP is also driven by Moody's governance
concerns over board independence and oversight as well as the
bank's rising asset risks and low loss absorbing buffers. These
governance risks are reflected in its governance issuer profile
score of G-4 and environmental, social and governance (ESG) Credit
Impact Score (CIS) of CIS-4.
NEGATIVE OUTLOOK ON THE LT DEPOSIT AND ISSUER RATINGS OF BRAC, EBP,
CBP, DBBP, MBP, PBP
Change in outlook on the banks' LT deposit and issuer ratings to
negative from stable is in line with the negative outlook on
Bangladesh's sovereign rating. The negative outlook on the banks
also reflects Moody's expectation of heightened credit risk from
the deteriorating operating environment.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
WHAT COULD MOVE THE RATINGS UP
BRAC, EBP, CBP AND DBBP
An upgrade of the banks' LT deposit and issuer ratings and BCA is
unlikely because they are already at the same level as the
sovereign rating. Moody's could change the outlook on the LT
deposit and issuer ratings to stable if the sovereign rating
outlook is changed to stable while the banks' credit fundamentals
remain stable, particularly their asset quality and capital.
MBP
An upgrade of the bank's ratings over the next 12-18 months is
unlikely, given the negative outlook on the LT deposit ratings.
Moody's could change the outlook to stable if the bank (1) improves
its solvency buffers, including by way of an external capital
raise; (2) improves its asset quality; and (3) maintains its
funding and liquidity at current levels.
PBP
An upgrade of the bank's ratings over the next 12-18 months is
unlikely, given the negative outlook on the LT deposit ratings.
Moody's could change the outlook to stable if the bank (1) improves
its loss buffers, including through an improvement in its core
capital and loan loss reserves; (2) stabilizes its asset quality;
(3) maintains its profitability; and (4) improves its liquidity
position.
WHAT COULD MOVE THE RATINGS DOWN
BRAC, EBP, CBP AND DBBP
Moody's could downgrade the banks' ratings and BCA if the sovereign
rating is downgraded or if the banks' fundamentals worsen because
of a deterioration in their loss-absorption capacity. Specifically,
a downgrade is likely if their tangible common equity to
risk-weighted assets declines below 7% or if their funding
weakens.
MBP AND PBP
Moody's would downgrade the banks' ratings if their credit profile
weakens because of, among other things, lower liquidity, higher
asset risk, funding pressure or a worsening operating environment.
A decline in government support for the banks would also result in
a downgrade.
LIST OF AFFECTED RATINGS
Issuer: BRAC Bank PLC.
Outlook Actions:
Outlook, Changed To Negative From Stable
Downgrades:
Adjusted Baseline Credit Assessment, Downgraded to b2 from b1
Baseline Credit Assessment, Downgraded to b2 from b1
LT Counterparty Risk Assessment, Downgraded to B1(cr) from
Ba3(cr)
LT Counterparty Risk Rating (Foreign Currency), Downgraded to B2
from B1
LT Counterparty Risk Rating (Local Currency), Downgraded to B1
from Ba3
LT Issuer Rating (Foreign Currency), Downgraded to B2 NEG from B1
STA
LT Issuer Rating (Local Currency), Downgraded to B2 NEG from B1
STA
LT Bank Deposits (Foreign Currency), Downgraded to B2 NEG from B1
STA
LT Bank Deposits (Local Currency), Downgraded to B2 NEG from B1
STA
Affirmations:
ST Counterparty Risk Assessment, Affirmed NP(cr)
ST Counterparty Risk Rating (Foreign Currency), Affirmed NP
ST Counterparty Risk Rating (Local Currency), Affirmed NP
ST Issuer Rating (Foreign Currency), Affirmed NP
ST Issuer Rating (Local Currency), Affirmed NP
ST Bank Deposits (Foreign Currency), Affirmed NP
ST Bank Deposits (Local Currency), Affirmed NP
Issuer: City Bank PLC.
Outlook Actions:
Outlook, Changed To Negative From Stable
Downgrades:
LT Counterparty Risk Rating (Foreign Currency), Downgraded to B2
from B1
Affirmations:
Adjusted Baseline Credit Assessment, Affirmed b2
Baseline Credit Assessment, Affirmed b2
LT Counterparty Risk Assessment, Affirmed B1(cr)
ST Counterparty Risk Assessment, Affirmed NP(cr)
LT Counterparty Risk Rating (Local Currency), Affirmed B1
ST Counterparty Risk Rating (Foreign Currency), Affirmed NP
ST Counterparty Risk Rating (Local Currency), Affirmed NP
ST Issuer Rating (Foreign Currency), Affirmed NP
ST Issuer Rating (Local Currency), Affirmed NP
LT Issuer Rating (Foreign Currency), Affirmed B2, Outlook changed
to NEG from STA
LT Issuer Rating (Local Currency), Affirmed B2, Outlook changed to
NEG from STA
ST Bank Deposits (Foreign Currency), Affirmed NP
ST Bank Deposits (Local Currency), Affirmed NP
LT Bank Deposits (Foreign Currency), Affirmed B2, Outlook changed
to NEG from STA
LT Bank Deposits (Local Currency), Affirmed B2, Outlook changed to
NEG from STA
Issuer: Dutch-Bangla Bank PLC.
Outlook Actions:
Outlook, Changed To Negative From Stable
Downgrades:
LT Counterparty Risk Rating (Foreign Currency), Downgraded to B2
from B1
Affirmations:
Adjusted Baseline Credit Assessment, Affirmed b2
Baseline Credit Assessment, Affirmed b2
LT Counterparty Risk Assessment, Affirmed B1(cr)
ST Counterparty Risk Assessment, Affirmed NP(cr)
LT Counterparty Risk Rating (Local Currency), Affirmed B1
ST Counterparty Risk Rating (Foreign Currency), Affirmed NP
ST Counterparty Risk Rating (Local Currency), Affirmed NP
ST Issuer Rating (Foreign Currency), Affirmed NP
ST Issuer Rating (Local Currency), Affirmed NP
LT Issuer Rating (Foreign Currency), Affirmed B2, Outlook changed
to NEG from STA
LT Issuer Rating (Local Currency), Affirmed B2, Outlook changed to
NEG from STA
ST Bank Deposits (Foreign Currency), Affirmed NP
ST Bank Deposits (Local Currency), Affirmed NP
LT Bank Deposits (Foreign Currency), Affirmed B2, Outlook changed
to NEG from STA
LT Bank Deposits (Local Currency), Affirmed B2, Outlook changed to
NEG from STA
Issuer: Eastern Bank PLC.
Outlook Actions:
Outlook, Changed To Negative From Stable
Downgrades:
LT Counterparty Risk Rating (Foreign Currency), Downgraded to B2
from B1
Affirmations:
Adjusted Baseline Credit Assessment, Affirmed b2
Baseline Credit Assessment, Affirmed b2
LT Counterparty Risk Assessment, Affirmed B1(cr)
ST Counterparty Risk Assessment, Affirmed NP(cr)
LT Counterparty Risk Rating (Local Currency), Affirmed B1
ST Counterparty Risk Rating (Foreign Currency), Affirmed NP
ST Counterparty Risk Rating (Local Currency), Affirmed NP
ST Issuer Rating (Foreign Currency), Affirmed NP
ST Issuer Rating (Local Currency), Affirmed NP
LT Issuer Rating (Foreign Currency), Affirmed B2, Outlook changed
to NEG from STA
LT Issuer Rating (Local Currency), Affirmed B2, Outlook changed to
NEG from STA
ST Bank Deposits (Foreign Currency), Affirmed NP
ST Bank Deposits (Local Currency), Affirmed NP
LT Bank Deposits (Foreign Currency), Affirmed B2, Outlook changed
to NEG from STA
LT Bank Deposits (Local Currency), Affirmed B2, Outlook changed to
NEG from STA
Issuer: Mercantile Bank PLC.
Outlook Actions:
Outlook, Changed To Negative From Stable
Downgrades:
Adjusted Baseline Credit Assessment, Downgraded to caa1 from b3
Baseline Credit Assessment, Downgraded to caa1 from b3
LT Counterparty Risk Assessment, Downgraded to B3(cr) from B2(cr)
LT Counterparty Risk Rating (Foreign Currency), Downgraded to B3
from B2
LT Counterparty Risk Rating (Local Currency), Downgraded to B3
from B2
LT Issuer Rating (Foreign Currency), Downgraded to B3 NEG from B2
STA
LT Issuer Rating (Local Currency), Downgraded to B3 NEG from B2
STA
LT Bank Deposits (Foreign Currency), Downgraded to B3 NEG from B2
STA
LT Bank Deposits (Local Currency), Downgraded to B3 NEG from B2
STA
Affirmations:
ST Counterparty Risk Assessment, Affirmed NP(cr)
ST Counterparty Risk Rating (Foreign Currency), Affirmed NP
ST Counterparty Risk Rating (Local Currency), Affirmed NP
ST Issuer Rating (Foreign Currency), Affirmed NP
ST Issuer Rating (Local Currency), Affirmed NP
ST Bank Deposits (Foreign Currency), Affirmed NP
ST Bank Deposits (Local Currency), Affirmed NP
Issuer: Premier Bank PLC. (The)
Outlook Actions:
Outlook, Changed To Negative From Stable
Downgrades:
Adjusted Baseline Credit Assessment, Downgraded to caa1 from b3
Baseline Credit Assessment, Downgraded to caa1 from b3
LT Counterparty Risk Assessment, Downgraded to B3(cr) from B2(cr)
LT Counterparty Risk Rating (Foreign Currency), Downgraded to B3
from B2
LT Counterparty Risk Rating (Local Currency), Downgraded to B3
from B2
LT Issuer Rating (Foreign Currency), Downgraded to B3 NEG from B2
STA
LT Issuer Rating (Local Currency), Downgraded to B3 NEG from B2
STA
LT Bank Deposits (Foreign Currency), Downgraded to B3 NEG from B2
STA
LT Bank Deposits (Local Currency), Downgraded to B3 NEG from B2
STA
Affirmations:
ST Counterparty Risk Assessment, Affirmed NP(cr)
ST Counterparty Risk Rating (Foreign Currency), Affirmed NP
ST Counterparty Risk Rating (Local Currency), Affirmed NP
ST Issuer Rating (Foreign Currency), Affirmed NP
ST Issuer Rating (Local Currency), Affirmed NP
ST Bank Deposits (Foreign Currency), Affirmed NP
ST Bank Deposits (Local Currency), Affirmed NP
The principal methodology used in these ratings was Banks published
in November.
BRAC Bank PLC. is headquartered in Dhaka and reported total
consolidated assets of BDT996 billion as of September 2024.
City Bank PLC. is headquartered in Dhaka and reported total
consolidated assets of BDT672 billion as of September 2024.
Dutch-Bangla Bank PLC. is headquartered in Dhaka and reported total
consolidated assets of BDT647 billion as of September 2024.
Eastern Bank PLC. is headquartered in Dhaka and reported total
consolidated assets of BDT568 billion as of September 2024.
Mercantile Bank PLC. is headquartered in Dhaka and reported total
consolidated assets of BDT430 billion as of September 2024.
Premier Bank PLC. (The) is headquartered in Dhaka and reported
total consolidated assets of BDT443 billion as of September 2024.
=========
C H I N A
=========
CHINA VANKE: S&P Lowers ICR to 'B+' on Shrinking Balance Sheet
--------------------------------------------------------------
S&P Global Ratings lowered its long-term issuer credit rating on
China Vanke Co. Ltd. to 'B+' from 'BB-', and its long-term issuer
credit rating on China Vanke's subsidiary, Vanke Real Estate (Hong
Kong) Co. Ltd. (Vanke HK), to 'B' from 'B+'. S&P also lowered the
issue rating on Vanke HK's senior unsecured notes to 'B' from
'B+'.
S&P said, "The negative outlook on China Vanke reflects our
expectation that the company's contracted sales could decline
further over the next 12 months and its liquidity could weaken if
it fails to execute asset disposals and debt refinancing via
asset-pledged bank borrowings.
"China Vanke's progress in reducing debt is slower than we
previously expected, leading to higher leverage. In our view, the
company's debt reduction progress is falling behind schedule. China
Vanke's total reported debt was Chinese renminbi (RMB) 327.6
billion as of Sept. 30, 2024, slightly higher than RMB320 billion
as of end-2023.
"The company has publicly stated it would reduce interest-bearing
debt by RMB100 billion in total in 2024-2025, but we believe such a
target could be difficult to attain. This is mainly because we
expect the company will prioritize preserving its liquidity buffer
over deleveraging. In fact, the company's bank borrowing has been
increasing.
"Coupled with weakening contracted sales and compressed margins, we
project the company's leverage (measured by adjusted debt to
EBITDA) to surge to 9.4x-10.5x in 2024-2026, from 4.2x in 2023, and
EBITDA interest coverage to weaken to 1.9x-2.1x in the same period,
from 4.6x in 2023.
"China Vanke's liquidity is weakening as short-term debt rises and
its cash balance declines. We continue to assess the company's
liquidity to be less than adequate. This is mainly due to an
increase in the company's short-term maturities and its shrinking
cash balance."
China Vanke's reported short-term debt surged to RMB116.8 billion
as of Sept. 30, 2024, from RMB62 billion as of end-2023. The
company is facing a bond maturity wall of more than RMB36 billion
equivalent in 2025 (onshore and offshore).
However, its reported unrestricted cash balance has fallen to
RMB77.3 billion as of Sept. 30, 2024, from RMB96.9 billion as of
end-2023. The company's holding company cash also dropped to RMB1.1
billion as of Sept. 30, 2024, from RMB7.1 billion as of June 30,
2024. In S&P's view, the drop in cash was mainly due to
higher-than-expected cash outflows from operations in the first
half of 2024, and financing cash outflows for bond repayments and
interest payments for all borrowings.
S&P said, "That said, we expect China Vanke's cash balance to
rebound by end-2024, as we expect the company to receive a
meaningful amount of cash proceeds from asset disposals in the
fourth quarter. Furthermore, we expect China Vanke to continue to
strive to achieve positive operating cash flow in the next 12
months, as its operating costs will decline along with decreasing
construction scale. China Vanke recorded positive operating cash
inflow in the second and third quarters of 2024.
"We expect the company will continue to dispose of noncore assets
to replenish liquidity. Its balance sheet will likely shrink. The
overall progress on fixed asset disposal is on track, in our view.
However, there is a time gap for cash collection. We estimate the
company could receive RMB21.6 billion of proceeds in the next 12
months from contracted asset disposals in 2023-2024 (including
return of land to the government).
"To replenish its liquidity, we believe the company will continue
streamlining its business by disposing of noncore fixed assets and
equity investments and speed up cash collection in 2025. However,
this is subject to market conditions and execution risks. In
addition, disposing of assets with a significant discount on book
value would shrink the company's balance sheet. This would dampen
China Vanke's long-term competitiveness. For the first three
quarters of 2024, the company recorded a net loss on disposals of
noncurrent assets of RMB2.5 billion.
"Given its surging leverage, shrinking balance sheet, and weakening
liquidity, we neutralized our previous positive comparable rating
analysis on a holistic basis."
China Vanke's reduced land acquisitions could undermine its market
position. China Vanke is likely to remain restrained in land
acquisitions in the next 12 months as the company prioritizes its
liquidity needs. S&P believes this will result in a lack of new
quality salable resources to be launched for pre-sale, and thus
potentially undermine its sales performance and market position.
Year-to-date, China Vanke has acquired 10 projects with an
attributable land premium of RMB3.5 billion. This is significantly
lower than the 40 projects with an attributable land premium of
RMB53 billion in 2023.
S&P said, "We expect the company's contracted sales to decline by
36% to RMB240 billion in 2024, and further by 19% to RMB195 billion
in 2025. In the first 10 months of 2024, China Vanke's contracted
sales declined by 35% to RMB202.6 billion. This was slightly weaker
than the 32.7% average decline for the contracted sales of the top
100 developers in China.
"Maintaining solid banking relationships will be key. We expect the
company to maintain solid banking relationships and be able to
obtain asset-pledged bank borrowings for debt refinancing. During
the first half of 2024, China Vanke's bank borrowings have
increased by RMB27.1 billion.
"We estimate China Vanke will continue to obtain commercial
property loans in 2025, with a similar amount as in 2024. For the
first three quarters of 2024, the company has obtained RMB18.7
billion in secured commercial property loans (on consolidated
basis).
"The negative outlook on China Vanke reflects our view that the
company's contracted sales could drop further over the next 12
months, mainly due to a lack of new salable resources and the
prolonged property market downturn in China." China Vanke's
liquidity could also weaken if the company fails to execute its
asset disposal plans and debt refinancing via asset-pledged bank
borrowings.
The rating and outlook on Vanke HK reflect those on its parent,
China Vanke. In S&P's view, Vanke HK will remain a highly strategic
subsidiary of China Vanke for the next 12-24 months.
S&P may lower the rating on China Vanke if its liquidity further
deteriorates or market position further weakens. This could happen
if:
-- The company's contracted sales, cash collection, and
profitability are weaker than S&P expects;
-- Cash outflow is beyond our expectations;
-- Its access to bank financing weakens; or
-- The company fails to execute its asset disposal plans.
S&P could lower the rating on Vanke HK if it downgrades China
Vanke. In addition, S&P may lower the rating on Vanke HK if:
-- S&P believes the company's importance to China Vanke has
weakened; or
-- China Vanke's control over, and supervision of, Vanke HK
weaken.
S&P said, "We may revise the outlook to stable if China Vanke's
contracted sales stabilize. At the same time, we would expect the
company to achieve adequate liquidity via successfully executing
its asset disposal plans while obtaining sufficient funds from
asset-pledged bank loans.
"We could revise the outlook on Vanke HK to stable if we take the
same action on China Vanke.
"Environmental factors are a negative consideration in our credit
rating analysis of China Vanke. The company's environmental risks
in property development are comparable to those of its peer
property developers. The company has a stable and experienced
management team. It also has a long record of prudent financial
management while meeting its strategic and operational goals."
ZONGMU TECH: To Raise Funds to Restore Full Salaries by Year-End
----------------------------------------------------------------
Yicai Global reports that a source at Zongmu Technology confirmed
to Yicai Nov. 27 that the Chinese autonomous driving startup has
adjusted staff salaries while normal payments are expected to
resume by year-end after a new round of funding.
Contrary to social media reports, the source at the Shanghai-based
company said it has not fully suspended staff payments, Yicai
relates.
According to Yicai, the reports said the producer of FlashBot, an
unmanned vehicle designed for charging electric cars, recently held
an all-staff meeting to announce that due to the business'
underperformance salaries would be halted from this month, with
only basic living expenses paid.
Zongmu is operating normally, the person said, and expects to
secure new financing before year-end to meet its significant
capital needs resulting from a big recent expansion. Salary
payments will be restored to normal once the funding is received,
but until then the firm will prioritize the funds it has for
production and the delivery of strategic projects, the source
added, Yicai relays.
Founded in 2013, Zongmu has completed 10 rounds of financing so
far, including investments from the Yangtze River Xiaomi Industry
Fund, backed by Xiaomi Chief Executive Lei Jun. Over the past three
years, Zongmu has lost nearly CNY1.6 billion (USD220.6 million).
Zongmu has suspended performance and year-end bonuses since 2023 as
a result of the challenging industry environment and missed
business targets, the insider, as cited by Yicai, said.
Funding for self-driving tech firms has dwindled in the last two
years, following relatively abundant years in 2020 and 2021, Paul
Gong, head of auto research at UBS Group in China, told Yicai.
Despite this, there has been no technological backsliding in terms
of development or widespread adoption, he pointed out.
Zongmu is not the only company in the industry facing challenges.
On Nov. 22, Great Wall Motor-backed Haomo.AI confirmed job losses,
describing them as "normal organizational structure adjustments."
Yicai adds.
=================
H O N G K O N G
=================
HEALTH AND HAPPINESS: S&P Affirms 'BB' ICR & Alters Outlook to Neg.
-------------------------------------------------------------------
S&P Global Ratings revised its outlook on Health and Happiness
(H&H) International Holdings Ltd. to negative from stable. S&P
affirmed its 'BB' issuer and senior secured issue credit ratings on
the company.
The negative outlook reflects the risk that demand for H&H's
products in China could be even weaker than S&P's revised
expectations and its ratio of debt to EBITDA could exceed its
assumption of 3.8x by the end of 2025 and our downgrade threshold
of 4x.
H&H's baby nutrition segment is likely to weaken further in the
next one to two years. The company's overall revenue decreased
quarter on quarter at a faster pace in the third quarter (ended
Sept. 30, 2024) of 2024 than in the first half of 2024. This is
contrary to S&P's prior expectation of a pickup in the quarter. The
main driver is the baby nutrition segment, whose sales declined
25.3% year over year in the quarter. In addition to overall
pressure from a declining birth rate in China, the company also
faces greater competitive pressure from domestic brands and
producers. Domestic producers have been marketing their products as
fresher and more compatible with infants' nutritional needs. This
appears to be resonating with Chinese consumers.
As H&H transitions to new national standards for infant formula in
early 2025 and clears old inventory, demand for the company's
products should see an initial pickup as these new products enter
its distribution channels. We forecast H&H's baby segment will grow
1% in 2025, higher than that of industry, as restocking temporarily
offsets structural and competitive issues. That growth is unlikely
to be sustainable. Accordingly, we forecast the decline will resume
in 2026 at industry level. We assume H&H would be able to regain
its relative competitiveness after it sorts out formulation and
distribution issues.
Slower growth in adult nutrition products is likely a temporary
setback. Revenue growth from adult nutrition slowed to 2% in the
third quarter of 2024 year over year, below our full year
expectation of 8%-10% for the segment. We believe the pullback is
temporary as adult nutrition products seem to have traction with
consumers since COVID-19 has abated. We expect 8%-10% annual growth
in 2024 and 2025, in line with growth of the nutrition product
industry.
H&H's EBITDA margin should decline slightly. The decline will be
mainly because of higher marketing expenses for adult nutrition.
The company is expanding its adult nutritional product distribution
channel to TikTok, which at least over the next one year has higher
distribution costs. Because adult nutrition is the company's most
profitable segment, movement in its EBITDA margin will meaningfully
affect the company's overall profitability. We expect the baby
nutrition segment's EBITDA margin to be relatively stable and its
effect on H&H's overall margin to be neutral. Despite the baby
nutrition segment's decline in revenue, its EBITDA margin has been
largely stable since 2023 because of cost reductions and
streamlining of its distribution channel.
H&H's recent financings improve its liquidity and its debt
maturities. The company has refinanced most of its near-term
maturities, including US$540 million (about Chinese renminbi [RMB]
3.9 billion) in syndicated loan in November 2024. This has pushed
its liquidity coverage (measured as its ratio of liquidity sources
to uses) to 1.8x over the 12 months from June 30, 2024, from 1.0x
in April 2024.
H&H has RMB778 million in residual maturities due in 2025 from a
bilateral loan and amortization of a US$540 million syndicated
loan. The company faces RMB3.0 billion in further maturities in
2026, about half related to US$300 million in senior unsecured
bonds due in June. We assume H&H will not face significant issues
refinancing these debts, based on its recent financings and
expanded funding channels including onshore loans, U.S. dollar
loans, and offshore bond markets.
The negative outlook reflects risks that demand for H&H's products
in China could be even weaker than S&P's revised expectations and
its adjusted debt-to-EBITDA ratio could exceed our assumption of
3.8x by the end of 2025 and our downgrade threshold of 4x. In
infant formula, a growing consumer preference for domestic brands
and price sensitivity could lead to a larger-than-expected decline
in revenue. Weaker discretionary spending could slow revenue
growth, causing a corresponding decline in profitability.
S&P could downgrades H&H if its debt-to-EBITDA ratio is unlikely to
improve to below 4.0x. This could happen if its operating
performance is weaker than it expects. Beyond the next 12 months,
we could also lower the rating if the baby nutrition business
contracts materially and growth in adult nutrition and pet
businesses are unable to compensate for this.
S&P would revises the outlook to stable if H&H can improve its
revenues and EBITDA, causing its adjusted ratio of debt to EBITDA
to decrease to below 4x. At the same time, H&H can maintain a sound
capital structure.
=========
I N D I A
=========
ADANI GREEN: S&P Affirms 'BB+' ICR & Alters Outlook to Negative
---------------------------------------------------------------
S&P Global Ratings revised to negative the outlook on Adani
Electricity Mumbai Ltd. (Adani Electricity) and Adani Ports and
Special Economic Zone Ltd. (Adani Ports). S&P also affirmed its
'BBB-' ratings on these entities.
Project finance entity Adani Green Energy Ltd. Restricted Group 2
(AGEL RG2) is a subsidiary of Adani Green Energy Limited (AGEL),
the entity linked to the allegations. Although it is ringfenced
from the parent, S&P revised to negative the outlook on AGEL RG2
and affirmed its 'BB+' issue rating.
S&P said, "The negative outlook on these entities indicates that,
in our view, their cash flows could be materially affected if their
funding access weakens, their funding costs rise significantly, or
the allegations are proven, in addition to our assessment of their
governance and business profiles.
"Our rating on North Queensland Export Terminal Pty Ltd. (NQXT)
already captures refinancing risk for maturities due in 2025;
therefore, we affirmed the 'BB' issue rating on NQXT and the
outlook remains stable. Similarly, Adani International Container
Terminal Private Ltd. (AICTPL) is not exposed to refinancing risk
or significant foreign exchange risk, so we affirmed our 'BBB-'
issue rating on AICTPL and the outlook remains stable."
One or more of the credit ratings referenced within this article
was assigned by deviating from S&P Global Ratings' published
criteria.
U.S. prosecutors' indictment of senior Adani Group leadership could
affect the group's funding access. The allegations could renew
questions over the group's governance practices and damage its
reputation. S&P will watch for any signs of weaker funding access
or concerns from existing lenders--which could be demonstrated by
the lowering of funding limits, nonrenewal of facilities, or
significantly higher credit spreads.
News of the indictment broke overnight, and thereafter, equity and
bond prices across Adani group companies have fallen sharply. The
group has cancelled a US$600 million concluded bond sale. This
indictment is independent of, but follows, a short-seller report
last year, which hit equity and bond prices across the group
although these had subsequently recovered. The group has denied the
allegations and asserted that they are baseless.
The group will need regular access to both equity and debt markets
given its large growth plans, in addition to its regular
refinancing. S&P said, "We believe domestic, as well as some
international banks and bond market investors, look at Adani
entities as a group, and could set group limits on their exposure.
This may affect the funding of rated entities. We note that the
rated entities have no immediate and lumpy debt maturities."
If allegations of illegal activities or misleading statements prove
true, S&P could assesses the group's governance more negatively.
This is because ownership of most Adani Group entities is held by
the same promoters, related-family entities, and trusts. The
chairman of AGEL, one of the board members under investigation, is
the founding promoter and is on the board of multiple Adani group
entities. The presence of Adani family members among the group's
boards of directors and senior management (including CEOs) means
they can significantly influence the business strategy, growth
plans, financial policies, reporting, and disclosures of operating
entities. Different group companies share some of the same managers
among the treasury, finance, and technical divisions.
In addition, S&P believes that if the allegations are proven, it
could have some bearing on the company's operations over time.
This could occur if there is a review of relationships with the
government agencies that award concessions and licenses, or with
offtakers and counterparties such as Solar Energy Corp. of India
(SECI), state distribution companies, and joint venture partners.
That said, the Adani companies we rate have long-established
infrastructure assets with strong fundamentals and cash flows.
This is underscored by the entities' good competitive position
(Adani Ports) or regulated assets with assured returns (Adani
Electricity). The firms currently have sufficient cash flows,
adequate liquidity, and face no significant refinancing needs.
Adani Ports repaid its maturities in July 2024 from own funds. S&P
does not rate AGEL.
Direct linkage of AGEL to the ongoing investigation raises risks
for AGEL RG2. This is a direct subsidiary of AGEL, the entity
mentioned in relation to charges under the U.S. Department of
Justice indictment. S&P said, "Despite project finance ring
fencing, we believe this linkage could affect the ability of
companies such as AGEL RG2 to renew hedging contracts, which have a
current tenor of three years, for their U.S. dollar bond, even
though they are not exposed to refinancing risk. Hence, we revised
the outlook to negative despite the debt being fully secured and
the presence of cash flow waterfalls that prioritize operating
expenditure and debt service over distributions. However, the
rating action did not affect the rated debt issued by the other
Adani entity project finance companies: Adani International
Container Terminal Pte. Ltd. (AICTPL, BBB-/Stable), and North
Queensland Export Terminal Pty Ltd. (NQXT, BB/Stable)."
S&P said, "We already incorporate NQXT's refinancing risk in our
rating; our assessment of its liquidity as less than adequate
results in a -1 notch adjustment. We apply this adjustment
because it has debt of A$329 million that is due to mature within
the next 12 months and the port's ratio of sources to uses of funds
is less than 1.0x over this period." The port intends to complete
its refinancing by January 2025. A further delay is likely to
increase liquidity risk and exert further downward rating pressure
as the next maturity date approaches.
AICTPL is a 50/50 joint-venture with Terminal Investment Ltd. (TIL;
not rated). The involvement of TIL as a partner provides
independent oversight, especially when coupled with board seats.
AICTPL has no hedging risk with U.S. dollar-linked revenue and its
U.S. dollar bond will fully amortize over the period to 2031. In
addition, the project has not further funding requirements or large
capital expenditure needs.
The negative outlook on Adani Electricity, Adani Ports, and AGEL
RG2 reflects the potential impact of the indictment on funding
access and governance risks for the larger Adani Group.
S&P said, "The stable outlook on our long-term issue rating on
NQXT's senior debt indicates that the project has predictable cash
flow based on take-or-pay contracts and cost passthrough
mechanisms. After factoring in the revised debt limits and
scheduled principal and interest payments to 2030, the project will
have a minimum debt service coverage ratio (DSCR) of 1.55x.
"The stable outlook on our long-term issue rating on AICTPL
indicates that we expect it to maintain predictable cash flow based
on fully market-based pricing and volume over the next 12-24
months. We forecast that the minimum DSCR, as calculated by S&P
Global Ratings, will be 1.73x (excluding the last period, which is
to be paid out of reserves)."
Adani Electricity, Adani Ports, and AGEL RG2: S&P said, "We could
lower our rating on Adani Electricity, Adani Ports, and AGEL RG2 if
we see signs that the ongoing investigation is significantly
weakening funding access and increasing funding costs. If the group
proves less able to raise funds; its support from banks weakens; or
the cost of funding increases, we could reassess its liquidity
position."
S&P could also lower its ratings on these entities if the
allegations prove to be true.
Finally, the rating could come under pressure if S&P reassess its
view of the group's governance, business position, or if
operational performance deteriorates.
NQXT: S&P said, "We may lower the rating on NQXT if it fails to
refinance its bullet maturities well ahead of time. We could also
lower this rating if our base-case minimum DSCR dips below 1.55x or
if we see a material increase in the business risks associated with
the coal terminal, by more than we currently expect."
In S&P's view, this could occur if:
-- Contracted tariffs or volume are materially lower;
-- The nature of contracts materially changes;
-- One or more shippers cannot be replaced; or
-- Borrowing costs increase.
AICTPL: S&P could lower the rating on AICTPL if the minimum DSCR,
based on its calculations, is expected to fall below 1.60x. This
could occur if:
-- Volume or tariffs deteriorate sharply from our base case;
-- Operating challenges lead to significant and sustained
disruption of its port-handling capacity; or
-- Mundra loses market share due to ramping up of capacity in
local or regional competing ports.
S&P could also lower the rating if it lowered the sovereign credit
rating on India (BBB-/Positive/A-3).
Adani Electricity, Adani Ports, and AGEL RG2: S&P could revise the
outlook on Adani Electricity, Adani Ports, and AGEL RG2 to stable
if the group's funding access is unaffected and the U.S. DoJ
investigation indicates that the group's management was not engaged
in wrong-doing.
NQXT: S&P could raise the rating if:
-- S&P revises the liquidity assessment to adequate and the
minimum DSCR remains at or above 1.55x. This could happen if NQXT
finalizes refinancing for the upcoming A$329 million maturity and
the project's debt service reserve account holds an amount
sufficient to service principal and interest for at least six
months; or
-- Improved cash flow or reduced debt causes S&P's forecast
minimum DSCR to rise above 1.6x with a better downside resiliency
assessment, and the project successfully refinances its debt
maturity.
AICTPL: S&P considers an upgrade to be unlikely over the next
12-24 months, because the rating on AICTPL will remain constrained
by our 'BBB-' sovereign rating on India. In addition, it does not
expect AICTPL's stand-alone credit profile (SACP) to improve, given
that its overall financial metrics are constrained by the large
balloon payment.
Nevertheless, S&P could raise the rating if:
-- S&P raises the sovereign credit rating on India to 'BBB' from
'BBB-'; and
-- S&P views AICTPL's SACP as 'bbb' or higher.
The latter could occur if:
-- S&P's analysis of AICTPL under our sovereign default stress
test shows that it can repay its debt, even if there is a
foreign-currency-denominated sovereign debt default; and
-- S&P anticipates that the minimum DSCR under its base case will
remain above 1.75x and consider downside resilience to be high.
BALAJI INSTALMENTS: CRISIL Keeps B Debt Rating in Not Cooperating
-----------------------------------------------------------------
CRISIL Ratings said the rating on the fixed deposit programme of
Balaji Instalments Limited (BIL) continues to be 'CRISIL B/Stable
Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Fixed Deposits-LT 3.0 CRISIL B/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with BIL through
letters, dated September 17, 2024, among others, apart from
telephonic communication, for obtaining information. However, the
issuer has continued to be non-cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such
non-co-operation by a rated entity may be a result of deterioration
in its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward-looking component'.
Detailed Rationale
Despite repeated attempts to engage with the company's management,
CRISIL Ratings did not receive any information on the financial
performance or strategic intent of BIL, which restricts the ability
of CRISIL Ratings to take a forward-looking view on the entity's
credit quality. The rating action on BIL is consistent with
'Assessing Information Adequacy Risk'. Based on the last available
information, the rating on the fixed deposit programme of BIL
continues to be 'CRISIL B/Stable Issuer Not Cooperating'.
Incorporated in 1989, BIL is a deposit-accepting non-banking
financial company promoted by Mr Pramod Kumar Agarwal. It has
operations in Pilibhit, Uttar Pradesh. It provides loans for
refinancing of used commercial vehicles (CVs) such as trucks and
buses. It had an outstanding portfolio of INR2.02 crore and
networth of INR2.0 crore as on March 31, 2017.
CHARMS CHEM: CRISIL Keeps D Debt Ratings in Not Cooperating
-----------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Charms Chem
Private Limited (CCPL) continue to be 'CRISIL D/CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.0 CRISIL D (Issuer Not
Cooperating)
Inland/Import
Letter of Credit 0.5 CRISIL D (Issuer Not
Cooperating)
Proposed Fund-
Based Bank Limits 1.09 CRISIL D (Issuer Not
Cooperating)
Term Loan 0.55 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with CCPL for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of CCPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on CCPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
CCPL continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
Incorporated in 2001, CCPL manufactures herbal extracts and
phytochemicals which find application in oncology drugs and
nutraceutical products. The company is promoted by Mr. Milind
Honavar and Mrs. Sangeeta Honavar, and its manufacturing units are
located in Kurkumbh and Jejuri near Pune (Maharashtra).
DEEPAK CABLES: CRISIL Keeps D Debt Ratings in Not Cooperating
-------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Deepak Cables
India Limited (DCIL) continue to be 'CRISIL D/CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Rating - CRISIL D (ISSUER NOT
COOPERATING)
Short Term Rating - CRISIL D (ISSUER NOT
COOPERATING)
CRISIL Ratings has been consistently following up with DCIL for
obtaining information through letter and email dated October 25,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of DCIL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on DCIL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
DCIL continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
For arriving at its ratings, CRISIL has combined the business and
financial risk profiles of DCIL and its subsidiary Adhunik Power
Transmission Ltd (APTL). This is because these companies are
managed by the same promoters and have high financial fungibility.
DCIL primarily manufactures power conductor cables and executes EPC
(engineering, procurement, and construction) contracts in the power
transmission and distribution segment. In 2011, the company
acquired APTL, which has tower manufacturing facilities at
Jamshedpur, Jharkhand.
The Corporate Insolvency Resolution Process was initiated against
DCIL by an order dated August 23, 2018, of the National Company Law
Tribunal (NCLT). Further NCLT, through an order dated July 4, 2019,
has appointed a liquidator for sale of assets owned by the company
and liquidation is under process.
DUFLON INDUSTRIES: CRISIL Withdraws D Rating on INR4cr Cash Loan
----------------------------------------------------------------
CRISIL Ratings has withdrawn its ratings on the bank facilities of
Duflon Industries Private Limited (DIPL) on the request of the
company and after receiving no objection certificate from the bank.
The rating action is in-line with CRISIL Rating's policy on
withdrawal of its rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 0.35 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Cash Credit 4 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Export Packing 30 CRISIL D/Issuer Not
Credit Cooperating (Withdrawn)
Letter of Credit 9 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Proposed Long Term 5.80 CRISIL D/Issuer Not
Bank Loan Facility Cooperating (Withdrawn)
Term Loan 0.34 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Term Loan 2 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Term Loan 3.51 CRISIL D/Issuer Not
Cooperating (Withdrawn)
CRISIL Ratings has been consistently following up with DIPL for
obtaining information through letter and email dated April 19, 2024
among others, apart from telephonic communication. However, the
issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of DIPL. This restricts CRISIL
Ratings' ability to take a forward looking view on the credit
quality of the entity. CRISIL Ratings believes that rating action
on DIPL is consistent with 'Assessing Information Adequacy Risk'.
Based on the last available information, CRISIL Ratings has
continued the ratings on the bank facilities of DIPL to 'CRISIL
D/CRISIL D Issuer not cooperating'.
DIPL, incorporated in 1988, promoted by Mr Shailesh H Mehta,
manufactures PTFE products such as nozzles, valves, and lined
pipes, which are used mainly in the pumps and valves industry.
Company has two manufacturing locations which at Raigad Maharashtra
& other at Ahmedabad Gujrat.
GUPTA METAL: CRISIL Withdraws D Rating on INR75cr Cash Loan
-----------------------------------------------------------
CRISIL Ratings has withdrawn its ratings on the bank facilities of
Gupta Metal Sheets Limited (GMSL) on the request of the company and
after receiving no objection certificate from the bank. The rating
action is in-line with CRISIL Rating's policy on withdrawal of its
rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 20 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Cash Credit 75 CRISIL D/Issuer Not
Cooperating (Withdrawn)
Proposed Long Term 1.05 CRISIL D/Issuer Not
Bank Loan Facility Cooperating (Withdrawn)
Working Capital 7.5 CRISIL D/Issuer Not
Term Loan Cooperating (Withdrawn)
Working Capital 13.95 CRISIL D/Issuer Not
Term Loan Cooperating (Withdrawn)
CRISIL Ratings has been consistently following up with GMSL for
obtaining information through letter and email dated November 8,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of GMSL. This restricts CRISIL
Ratings' ability to take a forward looking view on the credit
quality of the entity. CRISIL Ratings believes that rating action
on GMSL is consistent with 'Assessing Information Adequacy Risk'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL Ratings has migrated the ratings on
the bank facilities of GMSL to 'CRISIL D/CRISIL D Issuer not
cooperating'.
GMSL was initially established as a partnership firm named Gupta
Enterprises in 1988. It was reconstituted as a public limited
company under the present name in April 2011. It manufactures
non-ferrous rolled semis, mainly copper-based alloys, strips and
sheets. The company's manufacturing facility is in Rewari, Haryana,
with total installed capacity of 15,000 metric tonne per annum.
GMSL is owned and managed by Mr Radhey Shyam Gupta and his
brothers, Mr Vijay Kumar Gupta, Mr Ravi Shanker Gupta and Mr Ripu
Daman Gupta.
LAXMI ENTERPRISES: CRISIL Keeps D Debt Ratings in Not Cooperating
-----------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Sri Laxmi
Enterprises (SLE) continue to be 'CRISIL D/CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7 CRISIL D (Issuer Not
Cooperating)
Cash Credit 2 CRISIL D (Issuer Not
Cooperating)
Letter of Credit 0.25 CRISIL D (Issuer Not
Cooperating)
Letter of Credit 4.75 CRISIL D (Issuer Not
Cooperating)
Term Loan 0.75 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SLE for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SLE, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SLE
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
SLE continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
SLE was established as a partnership firm in 2004 by Mr. Omprakash
Agarwal and his family members. It gins and presses raw cotton at
its ginning unit in Adilabad. It currently has four partners: Mr.
Amit Agarwal, Mr. Omprakash Agarwal, Ms. Arti Agarwal, and Ms. Usha
Agarwal.
NANGALI RICE: CRISIL Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Sri Nangali
Rice Mills Private Limited (SNRL) continue to be 'CRISIL D Issuer
Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 36 CRISIL D (Issuer Not
Cooperating)
Cash Credit 18 CRISIL D (Issuer Not
Cooperating)
Term Loan 4 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SNRL for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SNRL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SNRL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
SNRL continues to be 'CRISIL D Issuer Not Cooperating'.
SNRL was established in 2004 by Mr. Anil Aggarwal and his brothers,
Mr. Vijay Aggarwal and Mr. Satish Aggarwal, in Gurdaspur, Punjab.
The company mills and markets rice, mainly basmati rice, under its
Sri Nangali, Raj Mahal, White, and Swami brands. It is managed by
the three Aggarwal brothers, and their nephew, Mr. Manoj Aggarwal.
PRESTAR INFRA: CRISIL Keeps D Debt Ratings in Not Cooperating
-------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Prestar
Infrastructure Projects Limited (PIPL) continue to be 'CRISIL
D/CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL D (Issuer Not
Cooperating)
Letter of credit &
Bank Guarantee 5 CRISIL D (Issuer Not
Cooperating)
Loan Against
Property 4 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with PIPL for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of PIPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on PIPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
PIPL continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
The company was incorporated in 2002 by Mr Rajesh Dhariwal and Mrs
Chetna Dhariwal in Kolkata West Bengal. The company is engaged in
manufacturing and installation of roofing sheet, Guard Rail,
prefabricated structure, and other structural steel items.
RENEW ENERGY: Fitch Affirms 'BB-' LongTerm IDR, Outlook Stable
--------------------------------------------------------------
Fitch Ratings has affirmed the 'BB-' Long-Term Issuer Default
Ratings (IDRs) of Indian renewable power producer ReNew Energy
Global Plc (REGP) and onshore subsidiary ReNew Private Limited
(ReNew). The Outlook on the IDRs is Stable. Both companies have
similar credit profiles, with REGP as the offshore holding company
of the group. Fitch has also affirmed the 'BB-' ratings on the US
dollar notes issued by ReNew and REGP subsidiaries, India Clean
Energy Holdings and Diamond II Limited.
The affirmation reflects REGP's large and growing portfolio of
renewable power assets with long-term power purchase agreements
(PPAs), lower receivables and adequate liquidity profile. Fitch
expects REGP's high capex for projects under construction to keep
EBITDA net leverage high in the near to medium term. However,
rating headroom against REGP's EBITDA net interest cover negative
sensitivity of 1.5x, will improve gradually, as Fitch expects
coverage to rise to 1.8x by the financial year end-March 2027
(FY27) from a low of 1.4x in FY24.
Key Rating Drivers
Leading Producer: REGP's large and diversified portfolio provides
economies of scale and operating advantages, mitigating
concentration risk. Its power projects, including those under
construction, are diversified by source and geography, reducing
risks from adverse climatic conditions. Fitch expects REGP's solar
project generation to remain at the historical plant load factor
(PLF) of around 24%, while the wind projects' PLFs, of around 26%,
should increase marginally in the medium term, as new projects with
higher PLFs are commissioned.
Coverage to Improve: Fitch expects REGP's EBITDA net interest cover
to improve and sustain above 1.5x in the medium term, driven by
increasing EBITDA from its larger operating scale and some
reduction in capex from FY24 highs. An EBITDA increase would also
be supported by commissioning from REGP's solar module and cell
manufacturing business.
Lower Capex Intensity: Fitch expects REGP's capex intensity to drop
below 100% from FY25 (FY24: 195%) after commissioning of
large-scale projects under construction and due to delays in capex
on some of the committed projects caused by transmission network
readiness issues.
Adequate Financial Profile: Fitch expects REGP's EBITDA net
leverage to ease but remain above 6x (FY24: 8.5x) in the medium
term, due to large investment plans. Capex is likely to average
about INR81 billion a year in FY25-FY27 (FY24: INR154 billion).
Fitch expects REGP's financial profile to remain adequate for the
'BB-' ratings, given cash flow visibility from contracted renewable
portfolio, lower receivables and earning diversification from its
manufacturing. It has sold operating projects or stakes in
under-construction projects in the past to support capex and
maintain its financial profile.
Lower Receivables: Fitch expects REGP's receivable days to improve
to 82 in FY25 due to increasing exposure to sovereign-owned
entities that make timely payments, and the receipt of payments
from state utilities under late payment surcharge rules. Receivable
days improved to 102 in FY24 (FY23: 152) as state utilities cleared
part of their long outstanding dues.
Counterparty Profile to Improve: REGP's key counterparties,
state-owned power-distribution utilities that account for about 47%
of the current off-take, have delayed payments in the past.
However, Fitch expects REGP's exposure to them to fall to around
40% by FY26, as a large part of its capacity under construction is
tied up with sovereign-owned counterparties with timely payment
records.
Price Certainty, Volume Risk: Fitch believes the long-term PPAs for
the group's operating assets offer price certainty and long-term
cash flow visibility. Fitch expects more than 85% of group capacity
to be sold under PPAs with tenors of 20-25 years, even as REGP
increases direct off-take with corporate PPAs. Production volume
can still vary under the long-term PPAs because it is based on
resource availability, which is affected by seasonal and climatic
patterns.
Healthy Debt-Service Coverage: Fitch expects the cash flow from
operations (CFO)-based debt-service coverage ratio to improve to
1.1x (FY25: 1.0x) in the medium term, higher than the negative
sensitivity level of 1x, with an increase in cash generation from
larger operational capacity and lower receivables. Fitch monitors
the ratio (CFO + interest expense/scheduled project debt
amortisations + interest expense) at the ReNew and/or REGP
holding-company level and unrestricted projects to analyse
liquidity at the unrestricted portfolio, excluding the two
restricted groups
No Notching for Subordination: Fitch does not notch down the rating
of the three US dollar notes issued by ReNew, India Clean Energy
Holdings and Diamond II, in light of its assessment of at least an
average recovery for noteholders. The subordination risk is
mitigated by the cash available for upstreaming from REGP's
operating projects after servicing their own debt obligations. Its
view benefits from REGP's large scale and diversity, resource types
and counterparties. Fitch also factors in the subordination of
notes to prior-ranking project debt at operating entities in the
group.
Structural Subordination Risk: Fitch does not expect total debt at
the ReNew and REGP holding-company level to increase materially in
the near to medium term. However, a material increase in structural
subordination risk at these holding companies could lead to
negative rating action.
Currency Risk Mitigated: REGP's earnings are in Indian rupees but
its notes are in US dollars, resulting in exposure to
foreign-exchange risk. REGP has mitigated this risk by
substantially hedging the notes' coupon and principal.
Derivation Summary
Fitch views Greenko Energy Holdings (BB/Negative) and Concord New
Energy Group Limited (BB-/Negative) as REGP's close peers. Greenko,
like REGP, is one of India's leading power producers, with a focus
on renewable energy. However, REGP's operating capacity has
increased above Greenko's in recent years, as Greenko is focusing
on pumped hydro storage projects, which have a longer gestation
period than wind and solar power generation projects.
REGP's resource risk is lower, with higher exposure of 53% to
solar-based projects (Greenko: 28% solar and 14% hydro). Its
counterparty risk is also lower, with 51% capacity contracted with
sovereign-owned entities and the rest with state-owned distribution
companies (33%) and direct sales (16%). Greenko's better credit
assessment than REGP's is supported by its stronger financial
access, benefiting from its strong shareholders. This enables
Greenko to rely on fresh equity for investments and acquisitions,
while using cash generated from operations to deleverage.
Concord, a renewable power operator in China has roughly half of
its power generation guaranteed to be purchased by power grids at
fixed tariffs, while the rest is sold to markets with manageable
volume and price volatility. In comparison, most of REGP's capacity
is sold under long-term PPAs with better price certainty. However,
Concord's counterparty risks are lower than REGP's, as its
off-takers are mainly 'A+' rated power grid companies.
Both have similar financial profiles, resulting in the same overall
rating assessment. The Negative Outlook on Concord reflects the
rise in its EBITDA net leverage, along with its expectation of
delays in its deleveraging due to near-term pressure on utilisation
and realised tariffs for renewable power projects.
Key Assumptions
Fitch's Key Assumptions Within Its Rating Case for the Issuer:
- PLFs in line with the average historical performance or resource
assessment studies;
- Plant-wise tariff in line with respective PPAs;
- Average receivable days to decrease to 82 in FY25 (FY24: 102),
helped by regular payments from state distribution companies under
the government's late payment surcharge scheme and ReNew's
increasing exposure to sovereign-owned entities;
- Asset-level EBITDA margins of 80%-93%, in line with historical
performance, and overall EBITDA margins to decrease to below 70%
(FY24: 82%), with earnings contribution from its lower-margin
manufacturing business;
- Capex to average around INR81 billion a year from FY25 to
(1HFY24: INR57 billion, FY24: INR154 billion);
- No dividend payout in the medium term.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- Operating EBITDA/net interest expense below 1.5x for a sustained
period;
- Material increase in structural subordination risk at ReNew
and/or the REGP holding-company level, measured by a sustained
decline in their holding company-level CFO-based debt-service
coverage ratios (including cash flow from unrestricted projects) to
below 1.0x;
- Significant and prolonged deterioration of the receivable
position;
- Failure to adequately mitigate foreign-exchange risk.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
- Net debt/EBITDA below 5.0x on a sustained basis, provided there
is no significant increase in REGP's overall business risk
profile.
Liquidity and Debt Structure
REGP had cash and cash equivalents of INR74 billion at FYE24,
against INR81.4 billion in debt maturing over the next 12 months,
including short-term debt of INR51.6 billion. Fitch expects the
company to generate negative free cash flow in the near to medium
term, due to capacity additions. However, this is likely to be
mitigated by REGP's policy of funding the equity portion of capex
through a mix of capital recycling and internal accruals, and its
adequate access to onshore and offshore debt markets.
REGP has staggered debt maturities and benefits from a sound mix of
debt in the form of amortising project-level loans, with tenors of
between 13 and 23 years, and five tranches of US dollar notes
totalling USD2.2 billion, with an earliest maturity date of July
2026.
Issuer Profile
ReNew is one of India's leading renewable-energy companies with a
total capacity of about 16.3GW. The projects are spread across 10
states, and comprise wind, solar and hydro projects.
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
ReNew Energy
Global Plc LT IDR BB- Affirmed BB-
ReNew Private
Limited LT IDR BB- Affirmed BB-
senior secured LT BB- Affirmed BB-
India Clean
Energy Holdings
senior unsecured LT BB- Affirmed BB-
Diamond II Limited
senior secured LT BB- Affirmed BB-
RICE MILL: CRISIL Keeps B Debt Ratings in Not Cooperating
---------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Shiv Rice
Mill (SRM) continue to be 'CRISIL B/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.00 CRISIL B/Stable (Issuer Not
Cooperating)
Proposed Long Term 2.65 CRISIL B/Stable (Issuer Not
Bank Loan Facility Cooperating)
Term Loan 1.35 CRISIL B/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SRM for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SRM, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SRM
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
SRM continues to be 'CRISIL B/Stable Issuer Not Cooperating'.
Established in 2008, SRM mills non-basmati parboiled rice. Its
manufacturing facility is in Murshidabad (West Bengal). The firm is
owned by the Murshidabad-based Mr. Goutam Bhakat and Ms. Nafisa
Begam and their family members. The operations are managed by Mr.
Goutam Bhakat. SRM sells rice under the 'Shiv Rice' brand in the
open market; it also mills rice on a jobwork basis for government
agencies.
SHANTI NIKETAN: CRISIL Keeps D Debt Ratings in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Shanti
Niketan Trust (SNT) continue to be 'CRISIL D/CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Overdraft Facility 0.65 CRISIL D (Issuer Not
Cooperating)
Term Loan 6.53 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SNT for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SNT, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SNT
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
SNT continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
SNT was set up in 2008 in Meerut and offers courses in engineering,
MBA, Post Graduate Diploma in Management (PGDM), and polytechnic.
The trust has sanctioned capacity of 1000 students (360 in bachelor
of technology, 120 in PGDM, 120 in MBA, 300 in polytechnic, and 100
in bachelor of education) and is affiliated to Mahamaya Technical
University.
SHRIMATI POORNA: CRISIL Keeps D Debt Rating in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of Shrimati
Poorna Devi Memorial Trust (SPDMT) continues to be 'CRISIL D Issuer
Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 9 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SPDMT for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SPDMT, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SPDMT
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
SPDMT continues to be 'CRISIL D Issuer Not Cooperating'.
SPDMT was set up in May 2015 by Mrs Deepti Rawat, Mr Toshit Rawat,
and Mrs Lakshmi Rana to establish a nursing and paramedical college
at Shankarpur village, District Dehradun.
SHYAM FIBERS: CRISIL Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Shyam Fibers
continue to be 'CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.00 CRISIL D (Issuer Not
Cooperating)
Long Term Loan 1.51 CRISIL D (Issuer Not
Cooperating)
Proposed Long Term 1.09 CRISIL D (Issuer Not
Bank Loan Facility Cooperating)
CRISIL Ratings has been consistently following up with Shyam for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of Shyam, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on Shyam
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
Shyam continues to be 'CRISIL D Issuer Not Cooperating'.
Established in 2005, Shyam gins and presses cotton. It is a sole
proprietorship firm owned by Mr. Sumit Agrawal and is managed by
him with the help of his brother, Mr. Shyam Agrawal. The firm
operates a cotton-ginning and-pressing unit at Borad village in
Nandurbar district (Maharashtra) with total installed capacity of
around 250 cotton bales per day. Its capacity was enhanced through
the setting up of a new ginning unit, which commenced operations in
November 2014.
SIDDHI VINAYAK: CRISIL Keeps D Debt Ratings in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Siddhi
Vinayak Alloys (SVA) continue to be 'CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3.4 CRISIL D (Issuer Not
Cooperating)
Term Loan 4.6 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SVA for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SVA, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SVA
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
SVA continues to be 'CRISIL D Issuer Not Cooperating'.
SVA was set up as a partnership firm of Mr Jigar Patel and his
family, in September 2014. The Mehsana (Gujarat)-based firm has
been formed to manufacture mild steel castings for engineering
companies.
SIDDHIDATA AGRO: CRISIL Assigns B+ Ratings to INR40cr Loans
-----------------------------------------------------------
CRISIL Ratings has assigned its 'CRISIL B+/Stable' rating to the
long-term bank facilities of Shree Siddhidata Agro Industries Pvt
Ltd (SSAIPL)
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 12 CRISIL B+/Stable (Assigned)
Term Loan 28 CRISIL B+/Stable (Assigned)
The rating reflects the company's exposure to risks related to
implementation of its ongoing project and the leveraged project
funding. These weaknesses are partially offset by the low funding
risk for the project and low supply risk due to favourable
location.
Analytical Approach
CRISIL Ratings has evaluated the standalone business and financial
risk profiles of SSAIPL.
Key Rating Drivers & Detailed Description
Weaknesses:
* Exposure to risks related to implementation of ongoing project:
SSAIPL is scheduled to commence operations by April 2025 and has
completed around 20% of its total project cost by October 2024. Any
delay in project completion or significant cost overrun may
adversely impact the company's operations.
* Leveraged capital structure: The capital structure of SSAIPL is
expected to be leveraged due to large debt availed for the project
leading to high gearing of above 3 times in the initial year of
operations. The capital structure is expected to improve as the
company ramps up operations, but will likely remain leveraged over
the medium term.
Strengths:
* Low funding risk: The funding risk for the project is low as a
term loan of INR28 crore has been sanctioned and the promoters have
extended unsecured loan of around INR4 crore as of October 2024.
The promoters are expected to provide further funding support as
the project progresses. The sanctioned term loan and promoters'
funds should support timely project completion.
* Low supply risk due to favorable location: The company is located
in a high wheat-yielding area of Uttar Pradesh and is expected to
procure adequate raw material to ensure high capacity utilisation.
Liquidity: Poor
The company has availed of a term loan of INR28 crore, repayment of
which will begin in October 2025, leaving cushion of around six
months from the date of commencement of operations (April 2025).
Timely commencement of operations and generation of sufficient cash
accrual will remain monitorable. Moreover, fund infusion by the
promoters in the form of unsecured loans or equity will support the
liquidity profile of the company.
Outlook: Stable
CRISIL Ratings believes the business of SSAIPL will be supported by
the promoters' experience in the agriculture sector.
Rating Sensitivity Factors
Upward factors:
* Timely commencement of operations, leading to
higher-than-expected revenue and profitability generating net cash
accruals to repayment cushion of above 1.2 times
* Improvement financial risk profile with steady accretion to
reserves
Downward factors:
* Considerable delay in commencement of operations, impacting debt
repaying ability leading to deteriorating in liquidity
* Significantly low cash accrual during the initial phase of
operations with ratio of accrual to debt obligation below 1 time
Incorporated in December 2022, SSAIPL is setting up a manufacturing
facility at Kopaganj in Uttar Pradesh to produce wheat-related
products such as atta, sooji, maida and bran. The facility will
have two units - one for manufacturing sooji, maida, atta and bran
and the other for atta and bran. Overall manufacturing capacity
will be 400 tonne per day. The company is promoted by Mr Nirmal
Gupta and his family members.
SINGHAL AGENCIES: Ind-Ra Affirms BB+ Bank Loan Rating
-----------------------------------------------------
India Ratings and Research (Ind-Ra) has taken the following rating
actions on Singhal Agencies's (SA) bank facilities:
-- INR150 mil. Fund-based working capital limit assigned with IND
BB+/Stable/IND A4+ rating;
-- INR60 mil. Non-fund-based working capital limit** assigned
with IND A4+ rating;
-- INR90 mil. Non-fund-based working capital limit** affirmed
with IND A4+ rating;
-- INR185 mil. (reduced from INR240 mil.) Working capital demand
loan affirmed with IND BB+/Stable rating;
-- INR150 mil. Fund-based working capital limit affirmed with IND
BB+/Stable/IND A4+ rating; and
-- INR14.70 mil. (reduced from INR18.3 mil.) Term loan due on
February 29, 2028 affirmed with IND BB+/Stable rating.
** non-fund-based working capital limit is a sub-limit of
fund-based working capital limits.
Detailed Rationale of the Rating Action
The affirmation reflects SA's low revenue visibility, seasonal and
tender-based nature of operations and stretched liquidity. The
ratings are supported by continued healthy EBITDA margins,
comfortable credit metrics, and the promoter's experience of more
than four decades in the printing and distribution industry.
Ind-Ra expects the scale of operations to improve in FY25, though
the EBITDA margins are likely to remain at similar levels,
considering the susceptibility to the cost of paper and similar
nature of operations. In FY25, the agency expects a marginal
improvement in the credit metrics because of schedule debt
repayment and reduction in financial expenses.
Detailed Description of Key Rating Drivers
Low Revenue Visibility: As of October 2024, SA had an outstanding
orderbook worth INR100 million, scheduled to be executed by
December 2024. The firm has bid for new orders with a total package
value of about INR5,000 million for academic year 2025-26; the
management expects to secure a sizeable portion of the same. In
FY24, the firm was able to secure about 25% of the total package
value of tenders for which it had bid.
Seasonal and Tender-Based Nature of Operations: SA takes up only
government contracts – from the Uttar Pradesh and Jharkhand
governments - on tender basis. Furthermore, the tender business is
price competitive and entails high working capital requirements.
However, the firm 's financial position and extensive experience in
the industry enables to secure healthy orders. Also, the orders are
based on the academic year cycle, resulting in the seasonal nature
of revenue billing.
Medium Scale of Operations; Revenue Likely to Improve in FY25: In
FY24, SA's revenue dipped to INR854.87 million (FY24: INR1,486.7
million) due lower execution of orders. However, the EBITDA
improved to INR133.55 million (FY23: INR99.95 million). The firm's
entire revenue is derived from the printing and distribution of
books as required by the state government. The revenue is billed to
the particular district once the firm executes 100% of the order;
thus, the revenue billed is high during the peak months, i.e.
January to July. In FY25, Ind-Ra expects an improvement in the
scale of operations, backed by the unexecuted orders worth INR100
million, which are scheduled to be executed by December 2024. SA
booked a revenue of INR597.11 million in 1HFY25, which relates to
the orders executed for the academic year 2024-25. Furthermore,
the firm has been bidding for new orders for academic year 2025-26
having total package value of around INR5,000 million, of which the
management is expecting to secure a sizeable order, of which
certain orders will be executed by FY25, leading to increased
revenue billing for the year.
Continued Healthy EBITDA Margins: In FY24, SA's EBITDA margins
improved to 15.62% (FY23: 6.72%) due to a decline in paper costs,
as the firm was able to hedge the purchase of paper, and a decrease
in printing and binding costs due to the installation of press
machines during the year. In FY24, SA's return on capital employed
stood at 20.6% (FY23: 21.7%). Cost of paper, which is the largest
cost involved in the printing of books, constituted 71.04% of the
revenue in FY24 (FY23: 78.33%). In FY25, Ind-Ra expects EBITDA
margins to remain at similar levels, considering the company's
susceptibility to the cost of paper prices and similar nature of
operations.
Comfortable Credit Metrics: In FY24, SA's credit metrics improved
due to an increase in the EBITDA to INR133.55 million (FY23:
INR99.95 million) and repayment of the unsecured debt that had been
availed for meeting working capital requirements. The gross
interest coverage (operating EBITDA/gross interest expense) rose to
2.63x in FY24 (FY23: 1.99x) and the net leverage (adjusted net
debt/operating EBITDA) reduced to 1.87x (6.67x). In FY24, SA
availed a long-term debt of INR10 million for meeting capital
expenditure. In FY25, Ind-Ra expects a marginal improvement in the
credit metrics on account of a likely increase in EBITDA, scheduled
debt repayments, and the absence of any major debt-led capex plans.
Long Operational Track Record; Experienced Promoters: The ratings
are supported by the promoter's experience of more than four
decades in the printing and distribution industry, which has led to
established relationships with its customers and has helped the
company consistently secure repeat orders from them.
Liquidity
Stretched: In FY24, SA's working capital cycle remained elongated
but improved to 183 days (FY23: 211 days), because of a reduction
in debtors days to 111 (211) and decline in inventory days to 72
(91). SA's average monthly maximum utilization of its fund-based
limits was around 76.43% and that of its non-fund-based limits was
around 63.92% of the sanctioned limits over the 12 months ended
August 2024. SA has debt repayment obligations of INR2.5 million
and INR2.1 million for FY25 and FY26, respectively. Furthermore,
the company does not have any capital market exposure and relies on
banks and financial institutions to meet its funding requirements.
In FY24, SA's cash flow from operations improved to INR424.71
million (FY23: negative INR699.73 million) due to the increase in
EBITDA and favorable changes in the working capital. In FY24, the
free cash flow also improved to INR410.11 million (FY23: negative
INR699.69 million). In FYE24, the cash and cash equivalent stood at
INR30.39 million (FYE23: INR0.13 million).
Rating Sensitivities
Negative: A decline in revenue and operating EBITDA, leading to
deterioration in the overall credit metrics, with the gross
interest coverage falling below 2.5x, or further pressure on the
liquidity position, all on a sustained basis, could lead to a
negative rating action.
Positive: An improvement in the liquidity position, a substantial
improvement in the revenue and operating EBITDA, leading to an
improvement in the credit metrics, with the gross interest coverage
sustaining above 2.5x, will be positive for the ratings.
About the Company
SA, a partnership firm that was incorporated in 1984, is engaged in
the printing and publishing of books for class 1 to 8 for the state
governments of Uttar Pradesh and Jharkhand. The firm's corporate
office is in Lucknow and its printing unit is located in Mathura.
The partners of the firm are Saroj Rani Agarwal and Kumkum Agarwal.
STERLING AND WILSON: Ind-Ra Hikes Bank Loan Rating to BB
--------------------------------------------------------
Ind-Ra has taken the following rating actions on Sterling and
Wilson Private Limited's (SWPL) bank facilities:
-- INR1.240 bil. (reduced from INR1.390 bil.) Fund-based limits*
upgraded; off Rating Watch with Developing Implications and
withdrawn;
-- INR1.570 bil. Proposed fund-based limits* upgraded; off Rating
Watch with Developing Implications and withdrawn;
-- INR13,301.3 bil. (reduced from INR17.209 bil.) Non-fund-based
limits* upgraded; off Rating Watch with Developing
Implications and withdrawn; and
-- INR5.110 bil. Proposed non-fund-based limits* upgraded; off
Rating Watch with Developing Implications and withdrawn.
* Upgraded to 'IND BB'/Stable/'IND A4+' before being withdrawn
Analytical Approach
Ind-Ra continues to take a fully consolidated view of SWPL and its
subsidiaries to arrive at the ratings, on account of the strong
operational and strategic linkages among them. The financial
profile is mainly driven by the standalone financial performance of
SWPL.
Detailed Rationale of the Rating Action
The resolution of the Rating Watch with Developing Implications
reflects the completion of the sale transaction of its data center
business, including additional capital infusion by Khurshed
Daruvala, a shareholder in SWPL, towards his shareholding in the
new company, DC Co. and the setting-off of the sale advances
received by the company against the sale proceeds of above
transaction. The upgrade reflects the improved balance sheet
position post the completion of the transaction and likely gradual
improvement in the operating performance in the medium term. The
sustained profitability generation from the non-data center
business shall be crucial for the improvement in SWPL's financial
profile. The management expects the balance standalone orderbook
(excluding data center) to generate double-digit gross margins in
FY25, and the company could break even on a standalone basis.
However, Ind-Ra believes that the legacy loss-making business in
its subsidiaries could constrain gross margins to high single-digit
on a consolidated basis in FY25, and the optimization of fixed
costs would be essential for the company to turn the EBITDA to
positive in the medium term.
Ind-Ra is no longer required to maintain the ratings, as the agency
has received a request for the withdrawal of ratings and a
no-objection issued by the bankers. This is consistent with
Ind-Ra's Policy on Withdrawal of Ratings. Ind-Ra will no longer
provide analytical and rating coverage for the company.
Detailed Description of Key Rating Drivers
Stretched Liquidity: SWPL was able to service its debt repayment
obligations of INR7.4 billion in March 2024 in a timely manner and
has successfully closed the sale of its data center business in
FY25. The post-transaction business profile, including orderbook
quality, fixed cost optimization and its consequent impact on
profitability and banking limits shall be the crucial for the
medium-term performance of the Company.
Post-Demerger Business Profile: According to the management, the
existing outstanding orderbook (excluding the data center business)
is likely to generate gross margins of lower double-digits on a
standalone basis and the company is likely to break even in FY25.
The standalone orderbook (excluding data center) stood at INR24.6
billion as of March 31, 2024 (1.4x of FY24 standalone revenue). The
company took several steps in the past one-to-two years to improve
the profitability, such as curtailing its presence in small-scale
mechanical, electrical, and plumbing (MEP) projects and
transitioning towards higher margins and/or higher ticket-size
orders to optimize overhead expenses. The company has undertaken
significant manpower reduction and is winding down its regional
offices to operate in a more centralized manner to reduce the
overhead costs. Over FY25-FY26, the company's ability to improve
its scale of operations and swing into profit in view of the above
measures as well as the sale of the data center segment shall
remain critical.
Weak Consolidated Operating Performance in FY22-FY24, but
Turnaround Likely from FY25: SWPL has been reporting losses at the
consolidated level for the past few years on account of its lower
margin legacy order book and high fixed costs due to smaller scale
jobs. The company reported consolidated EBITDA loss of INR6.89
billion in FY23 (FY22: INR6.06 billion). Furthermore, the
consolidated revenue decreased to INR19.95 billion in FY23 (FY22:
INR25.92 billion) as the company had strategically reduced its
order booking to first execute the legacy order book and implement
other restructuring plans simultaneously such as larger-scale
orders, segmental diversification, and cost trimming measures. The
management expects the company to have generated an annual
consolidated turnover of about INR20 billion from FY24. Ind-Ra
expects an improvement in the consolidated financial performance
from FY25, mainly driven by the improvement in the standalone
performance.
Liquidity
Stretched: On a standalone basis, SWPL had unencumbered cash and
cash equivalents of INR0.24 billion at FYE24 (FYE23: INR0.31
billion). SWPL had raised INR7.0 billion advances in March 2024,
which have been set off against the fructification of the
aforementioned transaction in FY25 easing off the immediate
liquidity pressure. The average utilization of fund-based working
capital limits was 88.9% for the 12 months ended September 2024.
The promoter group has demonstrated the strategic importance of the
entity by continuously providing tangible support. The promoter
group infused net INR1.33 billion into SWPL in FY24, mainly towards
loss-funding. The management stated that there is no other
long-term debt at the consolidated level. At the consolidated
level, the working capital cycle remained elevated in FY23, with
gross working capital (GWC)/revenue of 127% (FY22: 127%, FY21:
137%) and net working capital/revenue of 53% (55%, 49%). The
receivables and unbilled revenue contribute to a higher GWC due to
the supply-intensive nature of works as well as the pending
receivables from a past solar engineering, procurement and
construction (EPC) project undertaken for Sky Power Southeast Solar
India Private Limited's (Skypower). The likely sale of the gas
peaking power plant in the UK (sub-contracted to SWPL) and Skypower
assets over FY25-FY26 could lead to some moderation in the GWC.
Of the two pending solar assets of Skypower in Madhya Pradesh, one
asset of 50MW is already generating power, and the second 50MW
asset received a favorable judgement from the Supreme Court in
November 2022 for non-termination of the power purchase agreement
and is awaiting approval for commercials operations.
Simultaneously, the company is also exploring the possibility of a
stake sale with potential buyers for the two assets on a combined
basis. The management expects to receive INR5 billion-5.5 billion
from its two-third share of asset sale (including existing cash
accruals).
Any Other Information
Standalone Operating Profile: On a standalone basis, SWPL reported
operating revenue of INR17.73 billion in FY24 (FY23: INR13.68
billion), and gross operating profit of INR1.02 billion (loss of
INR2.11 billion). Ind-Ra believes that post the demerger, the
company shall require steady execution of orders and liquidity from
working capital limits to generate sustainable profits; specially,
in view of the impending change in the business profile and its
potential impact on SWPL's profitability and liquidity.
About the Company
SWPL is a leading provider of MEP services in India, with
international operations in the Middle East and Africa. Established
in 1927 as Wilson Electric Works, SWPL was formed in 1971.Shapoorji
Pallonji and Company Private Limited, part of the Shapoorji Group,
owns a 66.33% stake in the company, while the balance is held by
Khurshed Daruwala. Since FY20, the company has been offering EPC
activities for transmission and distribution, construction of data
centers and projects related to hybrid energy services, involving
multiple sources of fuel.
SUNSHINE INFRA: CRISIL Keeps D Debt Ratings in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Sunshine
Infra Engineers India Private Limited (SIPL) continue to be 'CRISIL
D/CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 15 CRISIL D (Issuer Not
Cooperating)
Bank Guarantee 15 CRISIL D (Issuer Not
Cooperating)
Bank Guarantee 40 CRISIL D (Issuer Not
Cooperating)
Proposed Long Term 105 CRISIL D (Issuer Not
Bank Loan Facility Cooperating)
Secured Overdraft 5 CRISIL D (Issuer Not
Facility Cooperating)
Secured Overdraft 25 CRISIL D (Issuer Not
Facility Cooperating)
Secured Overdraft 5 CRISIL D (Issuer Not
Facility Cooperating)
CRISIL Ratings has been consistently following up with SIPL for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SIPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SIPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
SIPL continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
SIPL was set up in 2010 by Smt. Lalitha Kumari and her business
associates. The company undertakes integrated projects for
construction of concrete and asphalt roads, including installation
of streetlights. It also undertakes projects involving resurfacing
of roads. The company is based in Hyderabad (Telangana), and caters
to state government entities in South India.
SYNDICATE JEWELLERS: CRISIL Keeps D Rating in Not Cooperating
-------------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of Syndicate
Jewellers Private Limited (SJPL; part of the Syndicate group)
continues to be 'CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 62 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SJPL for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SJPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SJPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
SJPL continues to be 'CRISIL D Issuer Not Cooperating'.
For arriving at the rating, CRISIL Ratings has combined the
business and financial risk profiles of SJPL and Syndicate
Jewellers (SJ), as the two entities, together referred to as the
Syndicate group, are under a common management and have strong
operational and financial linkages.
Incorporated in 2001 and promoted by Mr Rajendra Tosawad and Mr
Amar Singh Tosawad, SJPL retails gold and diamond ornaments,
premium watches, platinum jewellery, and other lifestyle items. SJ,
a proprietorship firm of Mr Rajendra Tosawad, has been operating a
jewellery showroom in Bhubaneswar since 1988.
TRIBHAWAN AND CO: CRISIL Keeps D Debt Rating in Not Cooperating
---------------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of Tribhawan and
Co. (TAC) continues to be 'CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Warehouse Receipts 10 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL Ratings has been consistently following up with TAC for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of TAC, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on TAC
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
TAC continues to be 'CRISIL D Issuer Not Cooperating'.
TAC was set up in 2013 as a proprietorship firm by Mr. Anil Jain.
The firm, based in Amritsar, is engaged in the trading of paddy and
rice (Basmati & Parmal).
UDGEETH NIRMAN: CRISIL Keeps B+ Debt Rating in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of Udgeeth Nirman
Private Limited (UNPL) continues to be 'CRISIL B+/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 10 CRISIL B+/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with UNPL for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of UNPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on UNPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
UNPL continues to be 'CRISIL B+/Stable Issuer Not Cooperating'.
Established in May 2010, UNPL, promoted by Mr Bijoy Kumar Jaiswal
and his wife, Ms Sandhya Jaiswal, who are based in Kolkata. The
company is the sole distributer of FMCG products (toothpaste,
juice, soap, shampoo, detergent, cosmetics, spices, and flour) of
PAL and ayurvedic products of DP in five districts of West Bengal
(Howrah, Hooghly, Nadia, Birbhum, and Bankura). FMCG products
account for 95% of total revenue, while ayurvedic medicines of DP,
subsidiary of Divya Yog Mandir Trust (DYMT) forms the rest.
UGR SILOS: Ind-Ra Cuts Loan Rating to BB-, Outlook Negative
-----------------------------------------------------------
India Ratings and Research (Ind-Ra) has downgraded UGR Silos
Hamirpur Private Limited's (UGRSHPL) term loan rating to 'IND BB-'
from 'IND BB/Negative (ISSUER NOT COOPERATING)' with a Negative
Outlook, as follows:
-- INR360 mil. Term loan due on March 2042 downgraded with IND
BB-/Negative rating.
Detailed Rationale of the Rating Action
The downgrade and Negative Outlook reflect UGRSHPL's delay in
project completion, the resultant cost-overruns, and likelihood of
the credit metrics being weak in the initial few years of
operations. However, the ratings are supported by the company's
long-term concession agreement with U.P. State Warehouse
Corporation (UPSWC), experienced promoters and locational
advantage. Ind-Ra expects the project to achieve completion in FY26
and the commercial operations to start during the same year.
Detailed Description of Key Rating Drivers
Delay in Project Completion: The downgrade reflects the delay in
the completion of UGRSHPL's project, which entails the construction
of four silos for grain storage in Hamirpur district in Uttar
Pradesh. The construction of the silos was initially scheduled to
be completed in FY25 and commercial operations were to start
accordingly. As per the management, the project has been delayed
because the Turkey-based contractor was impacted by the earthquake
in the country in February 2023, due to which they were not able
to complete the construction within the scheduled timeline.
UGRSHPL has now reassigned the contract to a contractor from Pune,
and expects the project to be completed in FY26. Furthermore, the
company has requested to the lender for an extension of the
repayment schedule for the term loan.
Cost Overrun: The ratings also factor in the likely cost over-runs
due to the delay in the completion of the project. As per the
management, the cost over-run is estimated to be around INR40
million as of November 2024, and such cost over-run would be borne
by the issuer.
Likely Modest Credit Metrics: Ind-Ra expects that the debt service
coverage ratio and overall credit metrics to be weak during the
initial years of commencement of operations, before improving in
line with the growth in the scale of operations.
Long-Term Concession Agreement: UGRSHPL has entered into a 32-year
concessional agreement with UPSWC for the storage silo facility. As
part of the agreement, UGRSHPL will receive fixed charges for
50,000MT capacity, and variable charges based on the capacity
utilization and handling charges as per the actual storage and
handling on a monthly basis. Ind-Ra, however, expects the scale of
operations to remain small over the medium term, as the fixed
payment receipts would provide limited scope for growth.
Experienced Promoter: The ratings are supported by the promoters'
experience of more than three decades in the construction industry
and execution of engineering, procurement and construction
projects, which helped the company secure the contract for UPSWC.
Locational Advantage: The rating also benefits from the project's
locational advantages, as there are only few storage facilities
available in Bundelkhand.
Liquidity
Stretched: UGRSHPL does not have any capital market exposure and
relies on banks and financial institutions to meet its funding
requirements. The promoters intend to infuse around INR210 million
as equity and unsecured loans till FY26. The company has repayment
obligations of INR9.30 million and INR23.4 million in FY25 and
FY26, respectively. UGRSHPL has availed a term loan of INR360
million to fund the project. Of the total project cost of
INR5,886.90 million, the company had incurred capex of only
INR205.50 million until September 2024, which was funded by
promoters' funds of INR81.10 million and term loan of INR124.40
million.
Rating Sensitivities
Negative: Any further delay in the commencement of operations and
achievement of stable operating performance after the commencement
of commercial operations, weaker-than-expected credit metrics and
shorter-than-expected extension for repayment of term loan by the
banker, which could impact the credit profile, could be negative
for the ratings.
Positive: The timely commencement of operations and the subsequent
achievement of stable operating profitability will be positive for
the ratings.
About the Company
Incorporated in July 2020, UGRSHPL is setting up a silo for grain
storage in Hamirpur district. The company's registered office is in
New Delhi.
UKAY LUGGAGE: CRISIL Lowers Rating on INR6cr Cash Loan to B
-----------------------------------------------------------
CRISIL Ratings has revised the rating on bank facilities of Ukay
Luggage India Private Limited (ULIPL) to' CRISIL B/Stable Issuer
Not Cooperating' from 'CRISIL BB/Stable Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL B/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
Proposed Term Loan 3 CRISIL B/Stable (ISSUER NOT
COOPERATING; Revised from
'CRISIL BB/Stable ISSUER NOT
COOPERATING')
CRISIL Ratings has been consistently following up with ULIPL for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of ULIPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on ULIPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
ULIPL revised to' CRISIL B/Stable Issuer Not Cooperating' from
'CRISIL BB/Stable Issuer Not Cooperating'.
ULIPL is promoted by Mr Rajendra Tulsidas Katore and Ms Anita
Rajendra Katore. The company is part of the Ukay group. Based in
Nasik, it manufactures soft and hard luggage for Samsonite and air
coolers for Symphony.
ULTRA DENIM: CRISIL Keeps B Debt Rating in Not Cooperating
----------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of Ultra Denim
Private Limited (UDPL) continues to be 'CRISIL B/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9.5 CRISIL B/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with UDPL for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of UDPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on UDPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
UDPL continues to be 'CRISIL B/Stable Issuer Not Cooperating'.
UDPL, incorporated in July 2011 by Mr Bhogilal Patel, manufactures
cotton-based-denim fabric at its unit in Gujarat Eco-Textile Park,
Surat.
UNITED FORTUNE: CRISIL Keeps D Debt Ratings in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of United
Fortune International Private Limited (UFIPL) continue to be
'CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Packing Credit 18 CRISIL D (Issuer Not
Cooperating)
Proposed Short Term 3 CRISIL D (Issuer Not
Bank Loan Facility Cooperating)
CRISIL Ratings has been consistently following up with UFIPL for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of UFIPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on UFIPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
UFIPL continues to be 'CRISIL D Issuer Not Cooperating'.
PNL was established in June 2007 in Navi Mumbai (Maharashtra). The
company is promoted by Mr. Sohail Munshi, who is its chairman and
managing director. The company trades in readymade garments (RMGs),
fabric, leather garments, and imitation jewellery, and primarily
exports to the Middle East, Asia, and Africa.
UFIPL was established in December 2011 in Mumbai. The company is
promoted by Mr. Sohail Munshi's younger brother, Mr. Ahtesham
Munshi. It trades in RMGs and fabric; it exports to the Middle
East, Asia, and Africa.
The two companies are ISO 9001:2008-certified and
government-recognised star export houses.
UNNATI WRITING: CRISIL Keeps D Debt Ratings in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Unnati
Writing Products Private Limited continue to be 'CRISIL D Issuer
Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 11 CRISIL D (Issuer Not
Cooperating)
Term Loan 3 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with Unnati for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of Unnati, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on
Unnati is consistent with 'Assessing Information Adequacy Risk'.
Based on the last available information, the rating on bank
facilities of Unnati continues to be 'CRISIL D Issuer Not
Cooperating'.
Unnati was set up as a partnership firm by Mr Sudarshan Gupta, his
brother Mr Suranjan Gupta, and Mr Raj Kumar Goel in 2001. It was
reconstituted as a private limited company in 2009. The company
manufactures ball pens, fountain pens, roller pens, and gel pens.
V. G. SHIPBREAKERS: CRISIL Keeps D Ratings in Not Cooperating
-------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of V. G.
Shipbreakers Private Limited (VGS) continue to be 'CRISIL D/CRISIL
D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7 CRISIL D (Issuer Not
Cooperating)
Letter of Credit 8 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with VGS for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of VGS, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on VGS
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
VGS continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
VGS, incorporated in 2006, is primarily engaged in ship breaking
and steel trading businesses. The company is owned and managed by
the Prajapati family based in Mumbai, Maharashtra.
V. P. M. SANKAR: CRISIL Keeps D Debt Rating in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of V. P. M.
Sankar and Son (VPMS) continues to be 'CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7.5 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with VPMS for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of VPMS, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on VPMS
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
VPMS continues to be 'CRISIL D Issuer Not Cooperating'.
VPMS was set up in 2008 by the proprietor, Mr Thangaprabhu. The
firm sells gold and silver jewellery (contributing 85% and 15%,
respectively, to revenue). VPMS has two showrooms in Tamil Nadu --
one each in Srivilliputur and Rajapalayam -- with combined area of
about 7,700 square feet.
VEDANTA RESOURCES: Fitch Assigns 'B-' LongTerm Foreign Currency IDR
-------------------------------------------------------------------
Fitch Ratings has published UK-based Vedanta Resources Limited's
(VRL) Long-Term Foreign-Currency Issuer Default Rating (IDR) of
'B-'. The Outlook is Positive. Fitch has also published VRL's
senior unsecured rating of 'B-', and a rating of 'B-' with a
Recovery Rating of 'RR4' to the USD1,200 million proposed senior
unsecured notes to be issued by VRL's subsidiary, Vedanta Resources
Finance II Plc, and unconditionally and irrevocably guaranteed by
VRL.
The Positive Outlook reflects VRL's reduced debt and improved
financial flexibility, evident from its better access to the
capital market to refinance its debt maturities. VRL's total
issuance of USD1.2 billion since September 2024 and plan for
another USD1.2 billion in issuance for refinancing will extend its
debt maturity terms, eliminate some restrictive covenants under
existing debt, reduce interest costs, and increase the holding
company's (holdco) capacity to raise share-backed debt.
The proactive refinancing also demonstrates improved financial
discipline, although failure to execute the proposed issuance and
refinancing could raise financial-access and discipline risks,
which may lead to the Outlook being revised to Stable.
VRL's 'B-' IDR factors in high refinancing risks, given USD2.3
billion in debt and around USD830 million in interest-servicing
needs until the first quarter of the financial year ending March
2027 (1QFY27). The covenants in a private loan also restrict the
holdco from using the brand fee income it receives from various
operating entities (opcos) to pay holdco interest. VRL's credit
risks will be driven by its ability to manage these liquidity
needs.
Key Rating Drivers
Improving Financial Flexibility: VRL raised USD900 million in
September and USD300 million in October 2024. Its plan to raise
another USD1.2 billion will help VRL repay USD1.2 billion in
existing bonds at the holdco. The refinancing will eliminate the
risk of acceleration, as a clause in the April 2026 bond states
that if it is not refinanced by December 2025, repayment of USD1.2
billion in existing bonds will be accelerated to April 2026 from
FY28 and FY29.
The refinancing would also relax the cap on debt at VRL guaranteed
by certain intermediate holdcos to USD4 billion from USD3 billion
currently, and reduce holdco interest costs by around USD45
million-50 million.
Better Financial Structure: The external holdco debt at VRL
(excluding Konkola Copper Mines) has dropped to around USD5 billion
(FY22: USD9 billion), driven by corporate actions such as enhanced
dividends from and the sale of stakes in opcos. Fitch believes the
recent issuance and refinancing have resulted in longer terms for
the holdco's debt maturity profile, which also improves its
financial structure.
Medium-Term Refinancing Risk: Fitch believes VRL faces high
refinancing risks given USD3.1 billion in debt and
interest-servicing needs until 1QFY27. Fitch expects VRL to meet
around half of this through income from brand fees and sustainable
dividends, and the remaining from a combination of refinancing
given improved funding access, sale of stakes in opcos and other
corporate actions. These options appear viable in light of
management's recent record of debt reduction and refinancing, but
execution risks remain.
High Interest Burden: Fitch believes the holdco's still-high
weighted-average interest cost of around 12% (including an
inter-company loan) and weak interest coverage of below 2.0x over
the next 18 months weigh on its credit profile. Fitch believes this
exposes VRL to increased refinancing risks, in the event operating
and/or credit market conditions deteriorate, until a large part of
its high cost debt with restrictive clauses is fully repaid. Fitch
believes it may face difficulty in accessing funding in less
favourable operating and/or market conditions.
ESG - Weak Governance Structure: VRL has a much smaller board of
directors than peers, with only three members, including two from
the founding family. The eight-member board of VRL's main opco,
Vedanta Limited (VLTD), includes three from the founding family -
the current CEO and two ex-senior executives - as independent
directors. This raises the risk of inadequate checks and balances
to prevent cash leakage outside VRL and protect creditors'
interests.
ESG - Complex Group Structure: VRL is a holding company whose cash
flow is structurally subordinated as opcos are held through various
indirectly owned intermediate holdco subsidiaries incorporated in
different jurisdictions. The presence of upstream debt guarantees
and different forms of share pledges at intermediate holdcos add to
the complexity.
Diversified Operations; Cyclical Industry: VRL's ratings reflect
its commodity diversification with zinc, aluminium, and oil and gas
contributing around 42%, 28% and 15%, respectively, of FY24
operating EBITDA. However, most of the prices of these minerals
tend to move sharply in the same direction, mitigating the
diversification benefit. The ratings also reflect the generally
low-cost position of VRL's Indian zinc mining assets and a modest
weighted-average reserve mine life of 10.5 years, which is shorter
than that of many higher-rated peers.
Derivation Summary
VRL's ratings are weighed down by its high refinancing risks,
despite having a stronger business profile than gold and base metal
producer Eldorado Gold Corporation (B+/Stable) and First Quantum
Minerals Ltd. (FQM, B/Rating Watch Negative), which is a top-10
global copper mining company.
VRL has larger EBITDA scale and greater commodity diversification
than the two peers. A majority of VRL's mining assets owned through
VLTD generally have an attractive cost position in the first or
second quartile of their respective cost curves. Eldorado also has
a similarly strong cost position, while FQM has a mid-ranking cost
position.
Key Assumptions
Fitch's Key Assumptions Within Its Rating Case for the Issuer
- London Metal Exchange prices in FY25, FY26 and FY27 for zinc of
USD2,691/tonne, USD2,450/tonne and USD2,325/tonne, respectively,
and USD2,385/tonne, USD2,375/tonne and USD2,300/tonne,
respectively, for aluminium.
- Brent crude oil prices in FY25, FY26 and FY27 of USD79.1/barrel,
USD68.8/barrel and USD65.0/barrel, respectively.
- Capex of USD2.6 billion-2.7 billion over FY25-FY26.
- Volume growth across various segments based on capex-led new
capacity ramping up.
- Dividends received by VRL from opcos' profit of USD0.6 billion
per annum starting FY26.
Recovery Analysis
The recovery analysis assumes that VRL's stake in its main listed
subsidiary, VLTD, would be liquidated in a bankruptcy. To calculate
the liquidation value of VRL's 56% stake in VLTD, Fitch refers to
the 25th percentile of VLTD's market capitalisation in the last 10
years to incorporate the risk of a weaker valuation at the time of
liquidation. Fitch takes 10% of administrative claims off the
enterprise value to account for bankruptcy and associated costs.
Fitch includes the inter-company loan of around USD417 million from
subsidiary Cairn India Holdings Limited and the USD5 billion of
holdco debt at VRL to estimate recoveries. The assumptions result
in a recovery rate corresponding to a Recovery Rating of 'RR2'.
However, VLTD is listed in and mainly operates in India, which
Fitch classifies as under Group D of jurisdictions, capping the
Recovery Rating for VRL's proposed senior unsecured notes at
'RR4'.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Inadequate progress on addressing the holdco's debt maturities in
the next 18 months.
- Signs of weakening liquidity, and/or funding access, and/or
financial discipline.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Substantial reduction in debt with restrictive covenants that
affect the holdco's financial flexibility.
- Track record of financial discipline, evident from refinancing
debt maturities sufficiently before they are due.
- VRL's holdco coverage (sustainable dividends + brand fees/gross
interest) on track to improve above 2.0x on a sustained basis.
Liquidity and Debt Structure
VRL had around USD5 billion of debt at the holdco in October 2024,
with USD220 million of repayments due in 2HFY25 and USD945 million
in FY26. Fitch expects VRL to meet its debt maturities until FY26,
supported by dividends from its operating subsidiaries, sale of
stakes in listed subsidiaries, and refinancing of a portion of debt
based on improving funding access. Nonetheless, weaker operating
and credit market conditions may lead to liquidity risks.
Issuer Profile
UK-based VRL acts as a group financing vehicle and holdco for
diversified metal and mining businesses held under its 56.4% stake
in VLTD. The zinc, aluminium, and oil and gas segments contributed
84% of VRL's FY24 EBITDA of USD4.1 billion, excluding one-time
arbitration gains of USD578 million.
Date of Relevant Committee
15 November 2024
MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS
Fitch's latest quarterly Global Corporates Macro and Sector
Forecasts data file which aggregates key data points used in its
credit analysis. Fitch's macroeconomic forecasts, commodity price
assumptions, default rate forecasts, sector key performance
indicators and sector-level forecasts are among the data items
included.
ESG Considerations
VRL has an ESG Relevance Score of '4' for Group Structure due to
its complex group structure, which has a negative impact on the
credit profile, and is relevant to the ratings in conjunction with
other factors.
VRL has an ESG Relevance Score of '4' for Governance Structure due
to a smaller board of directors than peers, which has a negative
impact on the credit profile, and is relevant to the ratings in
conjunction with other factors.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Recovery Prior
----------- ------ -------- -----
Vedanta Resources
Limited LT IDR B- Publish WD
senior unsecured LT B- Publish
Vedanta Resources
Finance II Plc
senior unsecured LT B- Publish RR4
VERSATILE MOBILE: CRISIL Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Versatile
Mobile Distributors Private Limited (VSTMDL) continue to be 'CRISIL
D/CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 3.15 CRISIL D (Issuer Not
Cooperating)
Bank Guarantee 2 CRISIL D (Issuer Not
Cooperating)
Cash Credit 5 CRISIL D (Issuer Not
Cooperating)
Cash Credit 3.85 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with VSTMDL for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of VSTMDL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on
VSTMDL is consistent with 'Assessing Information Adequacy Risk'.
Based on the last available information, the ratings on bank
facilities of VSTMDL continues to be 'CRISIL D/CRISIL D Issuer Not
Cooperating'.
VSTMDL, incorporated in 2008, is a distributor of mobile phones of
brands such as Apple and HTC. It operates mainly in Hyderabad and
is promoted by Mr. V Ramesh and Mr. T Manohara Rao.
VIJAYA AERO: CRISIL Keeps D Debt Ratings in Not Cooperating
-----------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Vijaya Aero
Blocks Private Limited (VABPL) continue to be 'CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5.0 CRISIL D (Issuer Not
Cooperating)
Long Term Loan 24.5 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with VABPL for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of VABPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on VABPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
VABPL continues to be 'CRISIL D Issuer Not Cooperating'.
Incorporated in 2012, VABPL manufactures AAC bricks and blocks at
the manufacturing unit in Mahabub Nagar District, Telangana. The
company started commercial operations in January 2016, and
operations are managed by Mr. Prasanna Kumar and Mr. Ram Prasad.
VISHNURAAM TEXTILES: CRISIL Keeps D Ratings in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Vishnuraam
Textiles Limited (VTL) continue to be 'CRISIL D/CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Bank Guarantee 0.11 CRISIL D (Issuer Not
Cooperating)
Cash Credit 3.75 CRISIL D (Issuer Not
Cooperating)
Cash Credit 0.55 CRISIL D (Issuer Not
Cooperating)
Letter of Credit 2.75 CRISIL D (Issuer Not
Cooperating)
Long Term Loan 4.5 CRISIL D (Issuer Not
Cooperating)
Long Term Loan 2.32 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with VTL for
obtaining information through letter and email dated October 10,
2024 among others, apart from telephonic communication. However,
the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of VTL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on VTL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
VTL continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
Incorporated in 1990, VTL is into manufacturing of cotton yarn. The
company has its manufacturing facilities in Tirupur and Udumalpet.
=================
I N D O N E S I A
=================
GAJAH TUNGGAL: Moody's Upgrades CFR & Senior Secured Notes to B2
----------------------------------------------------------------
Moody's Ratings has upgraded Gajah Tunggal Tbk (P.T.)'s corporate
family rating and the rating on its senior secured notes to B2 from
B3, and maintained the stable outlook.
The rating action follows Gajah's announcement on November 15 that
it had obtained two tranches of long-term credit facilities
amounting to IDR2.8 trillion ($175 million) and IDR1.6 trillion
($100 million). The credit facilities will be used to (1) refinance
Gajah's $175 million US dollar bond maturing in June 2026; and (2)
partly finance a planned expansion of its truck and bus radial
(TBR) tire production capacity.
"The upgrade of Gajah's rating to B2 reflects its abated
refinancing risks because the company will redeem its US dollar
bond ahead of maturity using proceeds from its new loan.
Additionally, Gajah has demonstrated its ability to access domestic
funding for both refinancing and expansion," says Yu Sheng Tay, a
Moody's Ratings Assistant Vice President and Analyst.
"Although Gajah's planned expansion project will entail high
capital spending over the next 12-18 months, a portion of such
spending has been pre-funded by the new loan. Moody's also expect
the company will be able to raise additional financing if needed,
given its improved financial profile," adds Tay.
RATINGS RATIONALE
Gajah has demonstrated its ability to access domestic funding from
bank lenders and has proactively addressed the refinancing risk of
its $175 million US dollar bond. Moody's expect the company to draw
down on its new credit facility and fully redeem the bond over the
next 12 months.
The new credit facilities are secured, denominated in local
currency, feature amortizing repayment schedules and have tenors of
up to nine years. Following the bond redemption, Gajah's exposure
to foreign currency risks will diminish because the company
generates more than 70% of its revenue in local currency while the
bond is denominated in US dollars.
Gajah will incur negative free cash flow in 2025 and 2026, compared
to around IDR 490 billion over the 12 months ended September 2024,
because of higher capital spending. The company is embarking on a
sizable expansion project to increase the installed production
capacity of its TBR tires in phases to 5,000 units per day from
2,900 units per day. Sales of TBR tires accounted for 14% of
Gajah's total revenue in 2023.
The expansion project will cost $196 million (IDR3.1 trillion) over
the next two years. Around half of the cost has been pre-funded by
the second tranche of the new credit facilities and Moody's expect
the company to raise additional financing if needed, supported by
its healthy financial profile.
Gajah's credit metrics are strong for its rating. Moody's project
the company's EBITDA to moderate to around IDR2.5 trillion over the
next 12-18 months as high rubber prices weigh on profitability,
from more than IDR3 trillion in the 12 months ended September
2024.
The company's leverage, as measured by debt-to-EBITDA, will weaken
to around 2.6x over the forecast period, from 1.6x over the 12
months ended September 2024. Nevertheless, Gajah's leverage remains
low for its rating and the company has buffers to absorb additional
debt or weaker earnings.
Gajah's B2 CFR reflects its position as a leading tire manufacturer
in the Indonesian market. The company benefits from a balanced
sales mix and focuses on the replacement tire market, which has
more stable demand because of its less discretionary nature.
However, Gajah's credit quality is constrained by its
susceptibility to margin and cash flow volatility. The company is
exposed to cyclical raw material prices and foreign exchange rate
movements, which result in significant working capital movements.
Gajah's liquidity is adequate. Pro forma for the drawdown of its
new credit facilities, the company had cash balances of IDR5.4
trillion as of September 2024. This, together with its projected
operating cash flow of around IDR2.0 trillion through March 2026,
will be sufficient to cover the bond redemption, estimated capital
spending of IDR2.9 trillion, loan repayments totaling IDR0.9
trillion and minimum working cash requirements of IDR0.6 trillion.
However, the buffer is limited, and Gajah may rely on external
financing to fund its cash needs in 2026.
The stable rating outlook reflects Moody's expectation that Gajah's
credit metrics will remain strong despite a moderation in earnings
over the next 12-18 months. At the same time, Moody's expect the
company to maintain adequate liquidity while executing its
expansion project.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's could upgrade the ratings if Gajah continues to grow its
revenue base while managing the volatility in its earnings and
operating cash flows. Credit metrics indicative of an upgrade
include debt/EBITDA below 3.5x and EBITA/interest above 2.5x
through the cycle. Moody's would also expect Gajah to reduce its
reliance on short-term funding and maintain adequate liquidity.
On the other hand, Moody's could downgrade the ratings if Gajah's
earnings and margins weaken such that its debt/EBITDA exceeds 4.5x
or EBITA/interest falls below 1.5x on a sustained basis.
Furthermore, a deterioration in its liquidity, because of cash
balances falling below $40 million, a loss of access to its working
capital lines or a breach in covenants, could lead to a downgrade.
The principal methodology used in these ratings was Automotive
Suppliers published in May 2021.
Gajah Tunggal Tbk (P.T.) is headquartered in Jakarta, Indonesia,
and is Southeast Asia's largest integrated tire manufacturer, with
an installed production capacity to produce 55,000 passenger car
radial (PCR) tires, 14,500 bias tires, 95,000 motorcycle tires and
2,900 truck and bus radial (TBR) tires per day. The company also
has installed capacity to produce 40,000 tons of tire cord and
75,000 tons of synthetic rubber per year for internal consumption
and third-party sales.
Gajah Tunggal's key shareholders include Denham Pte Ltd (49.5%) –
a subsidiary of Chinese tire manufacturer Giti Tire – and
Compagnie Financiere Michelin (10%). Its remaining shares are
publicly traded on the Indonesian Stock Exchange.
VALE INDONESIA: S&P Raises LongTerm ICR to 'BB+', Outlook Stable
----------------------------------------------------------------
S&P Global Ratings raised its long-term issuer credit rating on
Vale Indonesia to 'BB+' from 'BB' on Nov. 29, 2024.
The stable rating outlook reflects S&P's expectation that Vale
Indonesia will remain moderately strategic to MIND ID and maintain
low leverage through 2026.
S&P said, "Vale Indonesia will benefit from extraordinary support
from MIND ID, in our view. We consider Vale Indonesia to be of
moderately strategic importance to the Indonesian state-owned
mining company. Vale Indonesia is under the joint control of MIND
ID and Vale Canada Ltd. Still, we believe extraordinary support
will come from MIND ID in case of credit stress. Consequently, we
notch support from MIND ID's group credit profile to arrive at our
rating on Vale Indonesia.
"In our view, MIND ID has a greater influence on Vale Indonesia's
strategy and day-to-day business decisions than Vale Canada has.
This is because MIND ID has the right to nominate the chairman and
the CEO of the company. Moreover, we regard Vale Indonesia to be of
greater strategic importance to MIND ID than to Vale Canada, given
Vale Indonesia's vast nickel reserves that must be processed
domestically."
In July, Vale Canada and Sumitomo Metal Mining Co. Ltd. jointly
divested a 14% stake in Vale Indonesia to MIND ID under an
agreement brokered by the Indonesia government. Consequently, MIND
ID became the largest shareholder with a 34% stake while Vale
Canada's interest reduced to 33.9%. As part of the ownership
transfer, MIND ID injected US$89 million of fresh capital into Vale
Indonesia. In our view, this demonstrates MIND ID's willingness to
support Vale Indonesia's capital structure ahead of its planned
investments.
S&P said, "In our view, Vale Canada would remain a supportive
shareholder. This is despite the requirement to dilute its
ownership in Vale Indonesia under Indonesia's mining law. We
believe Vale Canada will not discourage MIND ID from directing
support to Vale Indonesia, where needed. Instead, Vale Canada would
likely continue to play an important role in Vale Indonesia's
operations and growth plans."
S&P views MIND ID's credit quality to be investment-grade. MIND ID
manages the Indonesia government's interests in the domestic mining
industry. The company's mandate entails preserving the government's
control over strategic mineral reserves and driving domestic
downstream development across the group's minerals value chain.
MIND ID's increased ownership and influence should support Vale
Indonesia's strategy to expand its mining operations and integrate
into downstream nickel processing capacities via joint ventures
(JVs). In S&P's view, this aligns with the government's aspiration
to entrench the country in the global electric vehicle value
chain.
Vale Indonesia will improve its operating scale and
diversification. This follows the company receiving a 10-year
extension for its mining license in May this year. Vale Indonesia
is eligible for a subsequent 10-year extension in 2035 if its
mining operations are integrated into downstream facilities.
Vale Indonesia's capital allocation through 2026 is largely
earmarked for development of two greenfield nickel mines, in
addition to brownfield expansion of its Sorowako mine to enable
mining of limonite ore. The limonite ore output will be sold to
downstream nickel processing JVs while the additional saprolite ore
will be sold in the domestic spot market. Vale Indonesia will own
100% of the two greenfield nickel mines, namely in Bahodopi and
Pomalaa.
Under the terms of the JV agreement, Vale Indonesia will have a
call option to acquire a 30% stake in the three downstream JVs,
which would depend on Vale Indonesia for limonite ore. These call
options would be exercisable within a five-year period after the
downstream processing capacities commence operations.
S&P said, "We expect Vale Indonesia to maintain headroom below a 2x
debt-to EBITDA ratio through 2026. This is despite weaker earnings
and cash flows than we expected due to a more than 20% fall in
nickel prices from last year. We forecast Vale Indonesia's EBITDA
will be US$200 million-US$240 million in 2024 and US$270
million–US$300 million in 2025. The levels are 50%-60% of our
previous expectations.
"We expect earnings contributions from Vale Indonesia's new
projects from 2027. This will support deleveraging. Our base case
forecasts the company's adjusted debt will increase to about US$500
million in 2026, owing to our anticipation of cumulative negative
free operating cash flow (FOCF) of about US$1 billion during the
period. Vale Indonesia's sizable cash balance of US$771 million as
of Sept. 30, 2024, will temper the shortfall in FOCF.
"We don't expect Vale Indonesia to distribute dividends in the next
few years as the company enters an investment cycle."
Vale Indonesia's investments into downstream JVs will likely be
beyond 2027. The company may exercise its call option to acquire
a 30% stake in downstream nickel processing JVs starting from 2027,
by when these downstream capacities should commence operations.
Due to the flexibility in the call options, any additional
investment that would drive up leverage remains contingent upon the
call options being exercised. Should the options be executed, S&P
would likely consolidate Vale Indonesia's share of earnings and
debt in these JVs on a pro-rata basis. The leverage will likely
rise, especially in the initial years while the projects are still
ramping up.
S&P said, "Nevertheless, we expect Vale Indonesia to remain prudent
while expanding into these downstream nickel processing JVs. This
was demonstrated by the company delaying its expansionary projects
amid significantly weaker nickel prices. Specifically, Vale
Indonesia has put on hold its Sambalagi JV. We expected the JV to
weigh on Vale Indonesia's credit metrics because it entailed US$400
million of fresh capital for a 49% stake. This is in addition to
guarantees to be provided for a pro-rated share of debt to be
raised at the JV.
"The stable outlook reflects our expectation that Vale Indonesia
will remain of moderately strategic importance to MIND ID and
maintain low leverage through 2026 even as the company expands its
mining operations. We forecast Vale Indonesia's debt-to-EBITDA
ratio will remain below 1.5x through to 2026.
"We could lower our rating on Vale Indonesia if the company
accelerates its pace of expansion amid soft earnings or lower
nickel prices. In such a scenario, we would expect the
debt-to-EBITDA ratio to stay above 2x.
"We could also lower our ratings on Vale Indonesia if the group
credit profile of MIND ID weakens such that it does not provide an
uplift to our rating on Vale Indonesia."
An upgrade is unlikely over the next 24 months because it would
require an improvement in the credit quality of both Vale Indonesia
and MIND ID. Upside rating momentum could ultimately come from Vale
Indonesia increasing its operating scale and diversification of
assets while maintaining a more conservative financial policy.
=========
J A P A N
=========
UNITIKA LTD: To Withdraw From Textile Biz in Turnaround Plan
------------------------------------------------------------
The Japan Times reports that Unitika said Nov. 28 that it will
withdraw from the textile business as part of turnaround efforts,
with support coming from the public-private fund Regional Economy
Vitalization Corp. of Japan (REVIC).
Unitika's textile division has been struggling in recent years due
to intensifying competition with Chinese and other rivals.
The Japan Times relates that Unitika, which has its roots in the
textile business, had submitted to REVIC a restructuring plan that
includes drastic structural reforms for unprofitable operations.
The fund told the company the same day that it has decided to
provide assistance.
By withdrawing from its original business and carrying out other
reforms to scale down its operations by around half, Osaka-based
Unitika aims to make all of its operations profitable in the fiscal
year through March 2028, the report says.
According to The Japan Times, the company plans to accept outside
directors from REVIC and MUFG Bank, one of its main creditor banks,
by late April next year, and all current internal directors will in
principle step down.
"There is a lot to regret," Unitika President Shuji Ueno told a
news conference in Osaka. "It is important for us as a company
with a long history to continue," he said. "This is our last chance
to survive."
Unitika will conduct structural reforms mainly in its apparel
textile, nonwoven fabric and industrial textile businesses, and
will withdraw from operations for which it has determined that
improving profitability is difficult, it announced, The Japan Times
relays. The three businesses account for around 40% of the
company's sales, and it hopes to conclude the reforms by next
August.
The Japan Times says the company hopes to focus on highly
profitable operations, including film and resin operations, while
thoroughly cutting costs to achieve a consolidated operating profit
of JPY6.5 billion ($43 million) in the fiscal year through March
2030.
Based on the turnaround plan, Unitika will ask its creditor banks
to waive debts worth around JPY43 billion, The Japan Times relays.
It will receive a roughly JPY20 billion investment from REVIC
through a third-party share allotment scheme.
Additionally, the company will secure credit lines worth up to
JPY15 billion from the fund and up to JPY9 billion from MUFG Bank.
For the previous business year, which ended in March 2024, Unitika
posted a net loss of JPY5.4 billion, The Japan Times discloses. It
is bracing for a loss of JPY10.3 billion for the current business
year, with its textile division projected to incur an operating
loss of JPY1 billion.
Based in Osaka, Japan, Unitika Ltd (TYO:3103) --
https://www.unitika.co.jp/e/index.html -- manufactures and sells
synthetic fibers and textile products used as apparel and
industrial materials. The Company specializes in cotton, nylon,
wool, and polyester textiles. UNITIKA also produces non-textile
products such as chemical resins, films, medical products, and
provides environmental engineering services.
===============
M A L A Y S I A
===============
PHARMANIAGA BHD: Bursa Malaysia Approves Regularisation Plan
------------------------------------------------------------
The Star reports that Pharmaniaga Bhd announced that Bursa Malaysia
has approved the group's regularisation plan (RP), marking a
significant milestone in Pharmaniaga's journey towards financial
recovery and long-term business sustainability.
According to The Star, Pharmaniaga managing director Zulkifli Jafar
said the approval from Bursa Malaysia paves the way for Pharmaniaga
to implement its comprehensive RP, designed to strengthen the
group's financial position, enhance operational efficiencies and
secure long-term growth.
"With this latest development, we are now fully focused on
executing the RP and achieving a swift exit from PN17," The Star
quotes Zulkifli as saying.
The Star relates that Zulkifli said the group assures its
stakeholders, including customers, investors and business partners,
that Pharmaniaga remains committed to maintaining the highest
standards of service and product quality throughout this period of
transformation.
The RP approval serves as a significant boost for the group, after
recently reported its improved financial performance for the third
quarter ended Sept. 30, 2024, The Star notes.
About Pharmaniaga
Pharmaniaga Berhad is an investment holding company. The Company is
principally engaged in the research and development, manufacturing
of generic drugs and medical devices, logistics and distribution,
sales, and marketing, as well as community pharmacy.
It was reported on Feb. 28, 2023, that Pharmaniaga had been
classified as an affected listed issuer under PN17. The
pharmaceutical company said it had triggered the PN17 criteria
pursuant to its audited consolidated financial statements for the
period ended Dec. 31, 2022.
===============
M O N G O L I A
===============
MONGOLIA: Moody's Upgrades Issuer & Senior Unsecured Ratings to B2
------------------------------------------------------------------
Moody's Ratings has upgraded the Government of Mongolia's long-term
issuer and senior unsecured ratings to B2 from B3. The short-term
issuer ratings are affirmed at Not Prime. The outlook remains
stable.
The upgrade of Mongolia's ratings to B2 reflects a significant
consolidation in its debt burden on the back of an uptick in
mineral revenues, combined with an emerging track record of
effective debt and fiscal management.
In conjunction with fiscal consolidation, prudent liability
management has resulted in debt obligations being successfully
refinanced over recent years, thus clearing the maturity schedule
until 2026 and alleviating liquidity risks, albeit from high
levels.
Strong trends in trade over the last year are also reflected in a
build-up in foreign reserve buffers, which are likely to remain
around current levels, underpinned by steady export growth. As a
result, external vulnerabilities have come off from high levels
more recently and should stabilize going forward, although they
continue to remain a credit constraint relative to B-rated peers.
The B2 rating reflects Mongolia's susceptibility to commodity price
cycles due to its narrowly diversified economic structure, which
results in high growth and fiscal volatility. This is balanced by
strong growth prospects, backed by structural global demand for
copper, which will temper the economy's overall sensitivity to coal
demand over time.
Although it is likely that some of the improvements in these
metrics could normalize as commodity prices and demand fluctuate, a
lengthening track record of effective fiscal and monetary
management would continue to support the credit profile. The stable
outlook reflects Moody's view that external liquidity risks, while
elevated, will remain manageable. Mongolia's sizeable market debt
obligations in 2026 are expected to be met with continued market
access at non-prohibitive costs, mitigating the probable risk of a
credit event consistent with a B2 rating.
Concurrently, Moody's have also raised Mongolia's local-currency
country ceilings to Ba3 from B1 previously. The two-notch gap to
the sovereign rating reflects a large government footprint in the
economy, high commodity reliance in overall revenues, and
still-high external imbalances. The foreign-currency country
ceiling is raised to B2 from B3 previously, representing a
two-notch gap to the local currency ceiling, to take into
consideration the assessment of weak policy effectiveness and high
external debt that point to transfer and convertibility risks at
times of heightened external vulnerability.
A List of Affected Credit Ratings is available at
https://urlcurt.com/u?l=EbGDr8
RATINGS RATIONALE
RATIONALE FOR THE UPGRADE TO B2
DEBT BURDEN TO STABILIZE FOLLOWING SIGNIFICANT CONSOLIDATION
Mongolia's debt ratio has declined from a peak of over 93% in 2016
and to 43% of GDP at the end of 2023. Moody's expect that the debt
burden will moderate further at the end of this year, before
gradually increasing to 54% by the end of the decade. However, this
remains consistent with the median for B1-B2 rated sovereigns
between 2025-2030, at 50.7% of GDP.
Debt reduction has been driven by a combination of high nominal GDP
growth and debt repayments, whilst new borrowings were limited.
Although nominal GDP has been propped by high inflation over
2021-22, real growth has also seen a steady expansion. In addition,
the fiscal balance has consolidated: on the back of improved
mineral revenues due to a favorable commodity price environment for
coal and copper, the fiscal position moved to a surplus in 2023,
for the first time since 2018.
Moody's expect that fiscal surpluses will be short-lived, and
factors in the balance reverting to a deficit this year. This,
coupled with the government's large planned infrastructure program
could further add to the debt burden.
Mongolia also has a history of procyclical fiscal policies.
Nevertheless, improvements in debt management will likely keep
fiscal outcomes within a range comparable to B2 peers. Recent
amendments to the government's fiscal responsibility legislation
specify the debt ceiling of 60% of GDP in nominal rather than net
present value terms, allowing for greater transparency. New rules
prioritize concessional funding and mandate a structural fiscal
deficit that is limited to 2% of GDP in debt per year. While these
measures are too recent to have any visible impact yet, adherence
could boost fiscal transparency and limit increases in market debt.
Moreover, despite the forecasted upward drift in the debt ratio, it
may be less likely that Mongolia will experience a spike in
leverage comparable to the previous cycle in 2013, as growth cycles
have turned more predictable given structural demand for copper,
and as Mongolia enjoys more established financial market access
compared to the past, allowing for a smoother refinancing of
maturities.
GOVERNMENT LIQUIDITY RISKS HAVE ALLEVIATED, UNDERPINNED BY CLOSER
FISCAL POLICY MANAGEMENT
Refinancing risks are materially lower in the medium term. Since
2020, the government has been consistently refinancing upcoming
maturities for the year ahead. This is in line with its debt
management strategy, that aims to reduce the pressure of the
external debt on budget in the long term and lengthen the maturity
profile of the debt portfolio. In addition, borrowing requirements
have significantly reduced.
Factoring in a wider fiscal deficit and large upcoming maturities,
Moody's expect gross borrowing requirements to rise to 11.7% of GDP
in 2026, from an estimated 5.4% of GDP 2024. Nonetheless, this is
lower both relative to peers as well as to historical trends. These
debt obligations should be financed relatively smoothly. The
issuance of domestic debt presents another financing option that
has not been tapped into in the past but could be met with demand
from the banking system and support the building of a yield curve.
HEALTHY GROWTH PROSPECTS REDUCE RISK OF VOLATILITY
Following a very strong growth performance in 2023 where real GDP
expanded by 7.1%, Moody's expect trends will moderate to 5.8% this
year, before edging higher in 2025. Beyond 2025, growth should
average around 6% with the completion of Oyu Tolgoi after it hits
sustainable production in 2028 resulting in some normalization in
the structural growth trajectory.
Mongolia's exposure to commodities continues to introduce a
disproportionate degree of growth volatility. While diversifying
its production and export base to other sectors has been a key
policy effort, that process has been slow and proceeded
incrementally. As Mongolia veers its commodity mix toward copper,
this volatility in growth caused by commodity cycles could
moderate.
Copper production would be supported by output from the Oyu Tolgoi
mine as it moves towards hitting peak production, and copper
content improves. Increased production should also be supported by
strong demand impetus, driven by organic improvements in living
standards, but more importantly by the use of copper in
electrification as energy transition goals become predominant, and
demand for digital infrastructure –which consumes more
electricity – increases. As currently operating copper mines are
mature and will face declining ore grades, this puts Mongolian
copper in a favorable position to meet global demand.
These trends should support a degree of vertical diversification
within the commodities sector.
Meanwhile, exports of coal - Mongolia's largest commodity export -
face the risk of a gradual slowdown in demand in the long run, due
to slower growth in China and global efforts toward carbon
transition. Nonetheless, agencies such as the International Energy
Agency still project relatively stable coal demand in the near
term, particularly for coking coal, which is used primarily for
steel-making. Mongolia's competitive pricing, strong ash content,
and better connectivity to China would likely underpin this
demand.
Another focus area for Mongolia has been to leverage its critical
mineral resources, as well as diversifying to other sectors such as
agriculture, tourism, and renewable energy.
RATIONALE FOR THE STABLE OUTLOOK
The stable outlook is premised on the view that external liquidity
risks will remain at elevated, albeit manageable levels. While
financing pressures may spike at various junctures given Mongolia's
market debt obligations, and the fiscal deficit will widen as
spending pressures persist and mineral revenues normalize, this is
balanced by Moody's expectation that the government will continue
to have access to markets at costs that are not prohibitive,
containing risks of a credit event to levels consistent with a B2
rating. While growth performance should remain strong in 2025, it
is subject to downside risks from slower growth in China,
Mongolia's largest trading partner.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS
Mongolia's ESG credit impact score is CIS-4, driven by high
exposure to environmental and governance risks. The sovereign also
has moderate exposure to social risks. The CIS-4 score indicates
that the rating is lower than it would have been if ESG risk
exposures were not present.
Mongolia has high exposure to environmental risks (E-4 issuer
profile score), reflecting an economy that is highly dependent on
the production and export of hydrocarbons, particularly coal, which
leaves the sovereign susceptible to carbon transition risk. The
nature of the coal-based economy coupled with continued
urbanization has also resulted in waste and pollution levels,
particularly air pollution. Mongolia is also vulnerable to water
scarcity driven by mineral extraction, overgrazing, deforestation
and desertification. These risks are driven by mining and
urbanization, and have threatened the livestock sector.
Exposure to social risks is moderate (S-3 issuer profile score).
The uneven distribution of incomes is balanced by a young
population coupled with a strong social safety net that has
enhanced the provision of health and education benefits. However,
access to basic services, including drinking water and sanitation,
is very weak.
Mongolia has high exposure to governance risks (G-4 issuer profile
score) with weak executive institutions and policy effectiveness
against ongoing structural reforms. Low fiscal prudence and a
tendency to procyclical policies curb the sovereign's financial
capacity to respond to environmental and social risks particularly
during economic downturns.
GDP per capita (PPP basis, US$): 17,884 (2023) (also known as Per
Capita Income)
Real GDP growth (% change): 7.2% (2023) (also known as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): 7.9% (2023)
Gen. Gov. Financial Balance/GDP: 1.4% (2023) (also known as Fiscal
Balance)
Current Account Balance/GDP: 0.6% (2023) (also known as External
Balance)
External debt/GDP: 168.3% (2023)
Economic resiliency: b1
Default history: No default events (on bonds or loans) have been
recorded since 1983.
On November 13, 2024, a rating committee was called to discuss the
rating of the Mongolia, Government of. The main points raised
during the discussion were: The issuer's economic fundamentals,
including its economic strength, have materially increased. The
issuer's institutions and governance strength, have not materially
changed. The issuer's fiscal or financial strength, including its
debt profile, has materially increased. The issuer's susceptibility
to event risks has not materially changed.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
FACTORS THAT COULD LEAD TO AN UPGRADE
The rating would likely be upgraded upon evidence of a sustained
build-up in the foreign exchange liquidity buffer supported by
non-debt creating inflows, that alleviate external liquidity risks
from sizeable debt obligations.
Evidence of a lengthening track record of policy prudence,
particularly with regard to measures that mitigate a tendency to
veer toward procyclical fiscal policies as well as enhanced
governance and supervision around state-owned entities, would be
credit positive.
A consistently falling debt burden accompanied by steady
improvements in debt affordability would also alleviate fiscal
constraints and drive upward rating momentum. These indications
would likely relate to improvements in the management of domestic
public finances, containing the government's funding requirements
and the economy's external financing needs.
Progress toward economic diversification away from a reliance on
commodities that reduces susceptibility to boom-bust economic
cycles would also likely be a trigger for upward rating action.
FACTORS THAT COULD LEAD TO A DOWNGRADE
A rating downgrade could be triggered by widening gross borrowing
requirements, and/or rising government liquidity risks that point
to difficulties in meeting these borrowing needs. Persistent
external financing gaps that threaten macroeconomic stability would
also exert downward rating pressures. A sustained shock to growth,
for instance through the derailment of large mining projects, would
also be a trigger for downward rating action.
The principal methodology used in these ratings was Sovereigns
published in November 2022.
[*] Moody's Takes Rating Actions on 8 Mongolian Banks
-----------------------------------------------------
Moody's Ratings has taken rating actions for Mongolian banks as
below following Moody's upgrade of the Government of Mongolia's
issuer rating to B2 from B3 with a stable outlook.
The upgrade of sovereign ratings reflects a significant
consolidation in Mongolia's debt burden, combined with its
improving debt and fiscal management, as well as prudent liability
management.
For Bogd Bank JSC (Bogd Bank), Khan Bank JSC (Khan Bank), State
Bank JSC (State Bank), and XacBank JSC (XacBank), Moody's upgraded
long-term foreign currency and local currency deposit ratings
and/or issuer ratings to B2 from B3, long-term local currency
Counterparty Risk Rating (CRR) to B1 from B2, and long-term
Counterparty Risk Assessment (CR Assessment) to B1(cr) from B2(cr)
as well as Baseline Credit Assessment (BCA) and Adjusted BCA to b2
from b3. For XacBank, Moody's also upgraded foreign currency senior
unsecured medium-term note (MTN) program rating to (P)B2 from
(P)B3.
For Golomt Bank JSC (Golomt Bank) and Trade and Development Bank of
Mongolia JSC (TDBM), Moody's upgraded long-term foreign currency
and local currency deposit ratings and issuer ratings to B2 from
B3. Moody's also upgraded Golomt Bank's foreign currency senior
unsecured debt rating to B2 from B3, and TDBM's foreign currency
senior unsecured MTN program rating to (P)B2 from (P)B3.
For Development Bank of Mongolia LLC (DBM), Moody's upgraded
long-term foreign currency issuer rating to B2 from B3, long-term
local currency CRR to B2 from B3, and long-term CR Assessment to
B2(cr) from B3(cr).
For Capitron Bank Closed JSC (Capitron Bank) and above seven banks,
Moody's upgraded their long-term foreign currency CRR to B2 from
B3.
At the same time, Moody's affirmed all other ratings and
assessments for the eight banks.
The eight banks' ratings outlooks, where applicable, remain
stable.
Mongolian sovereign rating upgrade does not affect the Macro
Profile for the Mongolian banking system which remains at "Weak
–".
A List of Affected Credit Ratings is available at
https://urlcurt.com/u?l=iamMHs
RATINGS RATIONALE
Bogd Bank, Khan Bank, State Bank and XacBank
The ratings upgrade was driven by the removal of constraint imposed
on the banks' BCAs by the Mongolian government's previous B3
rating. Following the Mongolian government's rating upgrade, the
banks' BCA and long-term deposit ratings and/or issuer ratings were
upgraded to b2/B2.
Golomt Bank and TDBM
The ratings upgrade was driven by the introduction of government
support uplift in their ratings, reflecting the Mongolian
government's improved capacity to support. As a result, their
ratings incorporate one notch of government support uplift to their
b3 BCA.
The high level of support reflects (1) their status as domestic
systemically important banks (D-SIBs); (2) the government's track
record of supporting systemically important banks; and (3) legal
framework of support stipulated in Mongolia's Banking Law.
DBM
The rating upgrade was driven by the expansion of government
support uplift, reflecting the Mongolian government's better
capacity to support. As a result, its rating incorporates two
notches of government support uplift from its caa1 BCA.
The government-backed level of support reflects (1) its role as
Mongolia's sole policy and export-import bank with an objective to
foster economic development; (2) the government's full ownership of
the bank; and (3) legal basis of government support under the
Development Bank of Mongolia Law.
The upgrade of Capitron Bank and above seven banks' long-term
foreign currency CRRs was driven by a lift in Mongolia's
foreign-currency country ceiling to B2 from B3.
Moody's consider Mongolia a jurisdiction with a nonoperational
resolution regime. For nonoperational resolution regime countries,
the starting point for the CRRs is one notch above the bank's
Adjusted BCA, to which Moody's then typically add the same notches
of government support uplift as applied to the CR Assessment.
The banks' respective CR Assessments before government support are
positioned one notch above their Adjusted BCA and, therefore, above
the senior unsecured debt ratings, reflecting Moody's view that the
probability of default is lower for operational obligations that
the CR Assessment represents than that of senior unsecured debt.
This reflects Moody's view that senior obligations, represented by
the CR Assessment, will more likely be preserved to limit
contagion, minimize losses and avoid a disruption of critical
functions.
For Golomt Bank and TDBM, the CR Assessments before government
support are in line with Mongolia's B2 government bond rating,
thus, Moody's do not add any uplift from government support. For
DBM, the CR Assessment before government support is B3(cr), thus,
Moody's add one-notch uplift to reflect the government support up
to the sovereign rating.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
-- Bogd Bank JSC
Bogd Bank's ratings are at the same level as the sovereign rating,
and a positive rating action is unlikely in the absence of an
upgrade of the sovereign rating.
Moody's could downgrade Bogd Bank's ratings if the sovereign rating
is downgraded or if the bank's BCA is lowered.
The bank's BCA could be lowered if its capitalization weakens
meaningfully with its tangible common equity (TCE)/risk-weighted
assets (RWA) falling below 15% level; its liquidity deteriorates
significantly with its liquid banking assets/tangible banking
assets declining below 30% level; its reliance on market funding
rises significantly, particularly borrowings from banks and
financial institutions; and its asset quality deteriorates with its
annual new nonperforming loan (NPL) loan formation ratio rising
above 5%, on a sustained basis.
-- Capitron Bank Closed JSC
Moody's could upgrade Capitron Bank's ratings if the bank's
systemic importance increases with its designation as D-SIB or the
bank's BCA is raised.
Capitron Bank's BCA could be raised if the bank's asset quality
improves and its concentration in cyclical sectors is lowered, such
as in mining, construction and trade, on a sustained basis, without
a weakening in its TCE/RWA and liquidity.
Moody's could downgrade Capitron Bank's ratings if the bank's BCA
is lowered.
The bank's BCA could be lowered if the bank's solvency weakens with
its TCE/RWA falling below 10%; and its liquidity deteriorates with
liquid banking assets/tangible banking assets declining below 35%,
on a sustained basis.
-- Development Bank of Mongolia LLC
DBM's rating is at the same level as the sovereign rating, and a
positive rating action is unlikely in the absence of an upgrade of
the sovereign rating.
Moody's could upgrade DBM's BCA upon successful restructuring of
its non-performing loans, resulting in a meaningful reduction in
problem loans/gross loans to well below 10% which concurrently
leads to improved profitability and capitalization on a sustained
basis.
Moody's could downgrade DBM's rating if the sovereign rating is
downgraded; the government's support for DBM weakens; or the bank's
strategic role and importance to Mongolia weaken.
DBM's BCA could be lowered if its capitalization deteriorates
without meaningful intervention from the government.
-- Golomt Bank JSC
Golomt Bank's ratings are at the same level as the sovereign
rating, and a positive rating action is unlikely in the absence of
an upgrade of the sovereign rating.
Moody's could upgrade Golomt Bank's BCA if the bank's asset quality
improves with a meaningful reduction in its loan borrower
concentration; and its return on assets remains above 0.8%, all on
a sustained basis, without a weakening in its capitalization, and
funding and liquidity profiles.
Moody's could downgrade Golomt Bank's ratings if the sovereign
rating is downgraded or if the bank's BCA is lowered.
The bank's BCA could be lowered if the bank's TCE/RWA falls below
10%; its funding and liquidity deteriorate significantly; and its
asset quality deteriorates such that its annual new NPL formation
ratio rises significantly.
-- Khan Bank JSC
Khan Bank's ratings are at the same level as the sovereign rating,
and a positive rating action is unlikely in the absence of an
upgrade of the sovereign rating.
Moody's could downgrade Khan Bank's ratings if the sovereign rating
is downgraded or if the bank's BCA is lowered.
The bank's BCA could be lowered if its asset quality deteriorates,
such that its annual NPL formation ratio rises significantly;
capitalization weakens substantially; and funding and liquidity
deteriorate significantly, with its market funds/tangible banking
assets rising well above 30% and liquid banking assets/tangible
banking assets falling below 20%, both on a sustained basis.
-- State Bank JSC
State Bank's ratings are at the same level as the sovereign rating,
and a positive rating action is unlikely in the absence of an
upgrade of the sovereign rating.
Moody's could downgrade State Bank's ratings if the sovereign
rating is downgraded or if the bank's BCA is lowered.
The bank's BCA could be lowered if it, on a sustained basis,
maintains aggressive asset expansion that leads to material decline
in TCE/RWA; and its asset quality deteriorates, with its annual new
NPL formation ratio rising above 5%.
-- Trade and Development Bank of Mongolia JSC
TDBM's ratings are at the same level as the sovereign rating, and a
positive rating action is unlikely in the absence of an upgrade of
the sovereign rating.
Moody's could raise the bank's BCA if the bank's asset quality
improves with a meaningful reduction in its loan concentration in
cyclical sectors; and its return on assets remains above 0.8%, all
on a sustained basis, without a weakening in its capitalization,
and funding and liquidity profiles.
Moody's could downgrade TDBM's ratings if the sovereign rating is
downgraded or if the bank's BCA is lowered.
The bank's BCA could be lowered if its TCE/RWA falls below 10%; its
funding and liquidity deteriorate significantly; and its asset
quality deteriorates, such that its annual new NPL formation ratio
rises significantly.
-- XacBank JSC
XacBank's ratings are at the same level as the sovereign rating,
and a positive rating action is unlikely in the absence of an
upgrade of the sovereign rating.
Moody's could downgrade XacBank's ratings if the sovereign rating
is downgraded or if the bank's BCA is lowered.
The bank's BCA could be lowered if its TCE/RWA weakens
substantially; its asset quality deteriorates, such that the annual
new NPL formation ratio rises above 5%; and its reliance on market
funding rises significantly, particularly borrowings from banks and
financial institutions.
The principal methodology used in these ratings was Banks published
in November 2024.
=========
N E P A L
=========
NEPAL: Fitch Assigns 'BB-' LT Foreign-Currency IDR, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has assigned Nepal a Long-Term Foreign-Currency
Issuer Default Rating (IDR) of 'BB-' with a Stable Outlook.
Key Rating Drivers
Low Debt; Weak Structural Factors: The ratings reflect Nepal's low
and highly concessional government and external debt burdens,
strong external liquidity and solid growth prospects underpinned by
the hydropower sector. This is balanced against an underdeveloped
economy that is vulnerable to external shocks and natural
disasters. GDP per capita and governance metrics are well below the
'BB' median, but have been improving since the end of armed
conflict in 2006 and the subsequent political transition.
Stable Debt: Fitch estimates that federal (central) government debt
surpassed 44% of GDP in the fiscal year ending 15 July 2024 (FY24),
below the forecast 'BB' median of 55%. Fitch expects debt to remain
around these levels in the coming years amid a pick-up in growth
and fiscal consolidation under Nepal's IMF-supported programme.
Non-financial contingent liabilities appear limited, although
monitoring and oversight is still not comprehensive. Nepal's
provinces currently have no debt, and the bulk of state-owned
enterprise debt is on-lent from the government. Reported debt
includes guarantees (1% of GDP).
Strong Debt Affordability: Fitch estimates federal government
interest payments peaked at about 8% of revenue in FY24, just below
the forecast 'BB' median, although debt/revenue, at 230%, was above
the median. More than 40% of government debt is external and highly
concessional, with an average maturity of nearly 13 years and an
average interest rate of about 1%. Real interest rates are also low
on domestic debt, which has maturity of less than three years. This
reflects a liquid banking sector that is funded by large remittance
inflows and low policy rates that are accompanied by capital
controls.
Fitch expects Nepal to still enjoy strong availability of
concessional funding after graduating from Least Developed Country
Status in 2026.
Large Deficits; Consolidation: Fitch forecasts the federal
government deficit to narrow to 4% of GDP by FY26, from its
estimate of 5% in FY24 and nearly 6% in FY23 ('BB' median: 3%). The
consolidated general government position is better. State and local
governments, mostly funded via federal transfers, struggle with
spending execution and posted nearly 1% of GDP surplus in FY22.
Consolidation efforts are focused on raising revenue/GDP from the
low level of 19% FY24, in particular through more direct taxation,
as part of the government's domestic revenue mobilisation
strategy.
Revenue Shock: The fiscal deficit nearly doubled in FY23 on a sharp
decline in imports and import-related taxes. This was the result of
policies aimed at curtailing the current account deficit, which
widened as tourism revenue dropped, while Covid-19 pandemic-related
stimulus measures overheated the economy. These policies included
government spending cuts, higher interest rates and import
controls, and resulted in an economic slowdown.
Basic Fiscal Framework: The government tends to have optimistic
revenue growth forecasts, but regularly adjusts spending plans
mid-year to comply with a rule limiting annual domestic gross
borrowing to 5% of GDP. Government external debt is limited to 30%
of the preceding year's GDP. However, the government ran up a
negative treasury single account balance at the central bank of
about 3% of GDP at FYE23, although it still has general government
deposits.
Temporary External Surplus; Strong Reserves: Fitch expects stronger
domestic demand to widen the current account deficit to 4% of GDP
by FY26 and narrow reserve coverage to about nine months of current
external payments. This will exceed the 'BB' median of five months
and should comfortably support the long-standing Indian rupee peg.
Nepal posted a current account surplus of nearly 4% of GDP in FY24,
a stark turnaround from a deficit of 13% in FY22 on import
compression, tourism recovery and continued growth in remittances,
which reached about 70% of external receipts and 25% of GDP.
The current account surplus propelled foreign-exchange reserves to
over USD13 billion at FYE24, or nearly 12 months of current
external payments, and over 26% of broad money.
Net External Creditor: There is little external borrowing outside
the public sector, reflecting Nepal's minimal amount of foreign
direct investment and limited integration into the global financial
system. This saw Nepal post a net external creditor position of 10%
of GDP in FY24 ('BB' median: debtor position of about 15% of GDP)
and a net international investment position of 5% of GDP.
Burdensome procedures on profit repatriation and other regulations
on external transactions have historically constrained foreign
direct investment inflows significantly, but the authorities are
addressing this.
Growth Recovering: Fitch forecasts growth to pick up to about 5%
over the medium term, from the policy-induced slowdown to 2% in
FY23 and an estimated 3% in FY24. Nepal's growth is traditionally
driven by consumption and investment. The development of
hydropower, backed by an export agreement with India, supports
medium-term growth. Over the past 30 years, despite significant
political turmoil and a devastating earthquake in 2015, growth has
averaged at over 4% a year (over 3% per capita). Nevertheless, GDP
per head, at about USD1,400, remains a fraction of the 'BB'
median.
Large Banking Sector; Manageable Risks: Bank credit to the private
sector reached nearly 86% of GDP in FY24, down from a peak of 94%
in FY22. This is high for Nepal's level of development, but is
backed by a large remittance-funded deposit base of 106% of GDP.
Enhancements to the regulatory toolkit are a core focus of IMF
engagement. Financial soundness indicators are deteriorating, but
remain adequate. Underregulated non-bank financial institutions
represent another 10% of GDP in credit, but new licences have been
frozen and linkages with the broader financial system are limited.
Frequent Leadership Changes: Nepal has seen eight changes of
government since the beginning of 2014, with recurrent power
struggles and shifting political alliances undermining long-term
policymaking and development planning. Nevertheless, there appears
to be broad consensus around economic and fiscal management.
Political instability has had little effect on the operation of the
central bank.
ESG - Governance: Nepal has an ESG Relevance Score (RS) of '5' for
both Political Stability and Rights and for the Rule of Law,
Institutional and Regulatory Quality and Control of Corruption.
These scores reflect the high weight that the World Bank Governance
Indicators (WBGI) have in its proprietary Sovereign Rating Model.
Nepal has a medium WBGI ranking at the 34th percentile.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
- Public Finances: Substantial increase in the government debt/GDP
ratio; for example, due to less prudent fiscal management or large
increase in contingent liabilities, such as for hydro sector
expansion.
- External Finances: A material weakening of bilateral and
multilateral creditor support that strains external financing and
pressures foreign-exchange reserves; for example, due to slippage
on Nepal's IMF programme.
- Macro: A material weakening of medium-term growth prospects; for
example, due to challenges in implementing development projects
amid political instability.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
- Macro/Structural Features: Strong, stable economic growth
enabling substantial increases in GDP per capita, potentially
supported by improved governance standards and regulations
conducive to private and foreign investment.
- Public Finances: A material reduction in government debt; for
example, due to sustained revenue mobilisation.
Sovereign Rating Model (SRM) and Qualitative Overlay (QO)
Fitch's proprietary SRM assigns Nepal a score equivalent to a
rating of 'B+' on the Long-Term Foreign-Currency IDR scale. Fitch's
sovereign rating committee adjusted the output from the SRM to
arrive at the final Long-Term Foreign-Currency IDR by applying its
QO, relative to SRM data and output, as follows:
- Structural: +1 notch to adjust for the negative effect on the SRM
of Nepal's take-up of the Debt Service Suspension Initiative, which
prompted a reset of the 'years since default or restructuring
event' variable, which can pertain both to official and commercial
debt. In this case, Fitch judged that the deterioration in the
model as a result of the reset does not signal a weakening of the
sovereign's capacity or willingness to meet its obligations to
private-sector creditors.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centred
averages, including one year of forecasts, to produce a score
equivalent to a Long-Term Foreign-Currency IDR. Fitch's QO is a
forward-looking qualitative framework designed to allow for
adjustment to the SRM output to assign the final rating, reflecting
factors within its criteria that are not fully quantifiable and/or
not fully reflected in the SRM.
Country Ceiling
The Country Ceiling for Nepal is 'BB-', in line with the Long-Term
Foreign-Currency IDR. This reflects no material constraints and
incentives, relative to the IDR, against capital or exchange
controls being imposed that would prevent or significantly impede
the private sector from converting local currency into foreign
currency and transferring the proceeds to non-resident creditors to
service debt payments.
Fitch's Country Ceiling Model produced a starting point uplift of
+0 notches above the IDR. Fitch did not apply a qualitative
adjustment to the model result.
Date of Relevant Committee
07 November 2024
ESG Considerations
Nepal has an ESG Relevance Score of '5' for Political Stability and
Rights, as WBGIs have the highest weight in Fitch's SRM and are
therefore highly relevant to the rating and a key rating driver
with a high weight. As Nepal has a percentile rank below 50 for the
respective WBGI, this has a negative impact on the credit profile.
Nepal has an ESG Relevance Score of '5' for Rule of Law,
Institutional & Regulatory Quality and Control of Corruption, as
WBGIs have the highest weight in Fitch's SRM and are therefore
highly relevant to the rating and are a key rating driver with a
high weight. As Nepal has a percentile rank below 50 for the
respective WBGI, this has a negative impact on the credit profile.
Nepal has an ESG Relevance Score of '4' for Human Rights and
Political Freedoms, as the Voice and Accountability pillar of the
WBGIs is relevant to the rating and a rating driver. As Nepal has a
percentile rank below 50 for the respective WBGI, this has a
negative impact on the credit profile.
Nepal has an ESG Relevance Score of '4'' for Creditor Rights, as
willingness to service and repay debt is relevant to the rating and
is a rating driver for Nepal, as for all sovereigns. Nepal's recent
restructuring of public debt via its participation in the Debt
Service Suspension Initiative has a negative impact on the credit
profile, albeit offset by the QO adjustment.
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating
----------- ------
Nepal LT IDR BB- New Rating
ST IDR B New Rating
LC LT IDR BB- New Rating
LC ST IDR B New Rating
Country Ceiling BB- New Rating
=====================
N E W Z E A L A N D
=====================
FP IGNITION 2011-1: Moody's Assigns B3 Rating to NZD4.4MM F Notes
-----------------------------------------------------------------
Moody's Ratings has assigned the following definitive ratings to
notes issued by NZGT (FP) Trustee Limited in its capacity as
trustee of the FP Ignition Trust 2011-1 - New Zealand in relation
to Series 2024-1.
Issuer: NZGT (FP) Trustee Limited in its capacity as trustee of the
FP Ignition Trust 2011-1 - New Zealand in relation to Series
2024-1
NZD204.9 million Class A Notes, Assigned Aaa (sf);
NZD16.5 million Class B Notes, Assigned Aa2 (sf);
NZD18.0 million Class C Notes, Assigned A3 (sf);
NZD9.0 million Class D Notes, Assigned Baa3 (sf);
NZD16.2 million Class E Notes, Assigned Ba3 (sf);
NZD14.4 million Class F Notes, Assigned B3 (sf);
The NZD21.0 million Originator Notes are not rated by us.
The transaction is a static cash securitisation of operating and
finance leases extended to New Zealand corporates, government and
small and medium-sized businesses. The leases are originated and
managed by FleetPartners Holding (NZ) Limited (FleetPartners,
unrated), a subsidiary of FleetPartners Group Limited (unrated) and
secured by passenger cars and commercial vehicles.
FleetPartners Group provide vehicle fleet leasing, fleet
management, heavy commercial vehicle commissioning and management,
salary packaging and novated leasing in the Australian and New
Zealand market. FleetPartners Group have been operating for over 40
years.
The securitised portfolio comprises lease instalment cash flows and
residual value cash flows. The present value of the outstanding
lease receivables balance is approximately NZD300.0 million and the
nominal value of estimated RV cash flows amounts to around NZD173.4
million. Due to the right of the lessees to return the vehicle at
contract maturity in order to cover the final lease balance
outstanding under an operating lease, the notes are exposed to both
default and market or residual value risk of the related vehicles.
RATINGS RATIONALE
The definitive ratings take into account, amongst other factors:
-- The evaluation of the capital structure, underlying portfolio
of leases obligors and underlying RV exposure. The notes will be
repaid on a sequential basis in the initial stages, until the
subordination percentage increases from the initial 31.7% to 41.0%
for the Class A Notes and no unreimbursed charge-offs, among other
pro rata paydown conditions, at which point Class A to Class F
Notes will be repaid on a pro-rata basis and senior to the
Originator notes. When the outstanding balance of the pool falls
below 20% of the initial pool balance at closing the notes will
once again be repaid on a sequential basis. There are other
portfolio performance triggers which must be met for the notes to
be paid pro-rata;
-- The liquidity facility in the amount of 1.50% of the note
balance invested amount, subject to a floor of NZD0.2 million;
-- The interest rate swap provided by ANZ Bank New Zealand Limited
(ANZ NZ, A1/P-1/Aa3(cr)/P-1(cr)) and Westpac Banking Corporation
(Westpac, Aa2/P-1/Aa1(cr)/P-1(cr)); and
-- The experience of FleetPartners as servicer and the back-up
servicing arrangements with Perpetual Corporate Trust Limited.
The transaction benefits from credit strengths such as experience
of the originator, diversification of vehicle manufacturer and
lease term dates and strong historical performance of the lease
portfolio. However, Moody's note that the transaction features some
credit weaknesses such as high lessee concentration and residual
value risk.
Key pool features are as follows:
-- Most of the receivables (95.5%) are secured by passenger
vehicles or light commercial vehicles (
HERSHELL'S FOODS: Creditors' Proofs of Debt Due on Jan. 13
----------------------------------------------------------
Creditors of Hershell's Foods Limited are required to file their
proofs of debt by Jan. 13, 2025, to be included in the company's
dividend distribution.
The company commenced wind-up proceedings on Nov. 21, 2024.
The company's liquidators are:
Rachel Mason-Thomas
Jeffrey Philip Meltzer
Meltzer Mason, Chartered Accountants
PO Box 6302
Victoria Street West
Auckland 1141
INNOVATIVE ROOFING: Court to Hear Wind-Up Petition on Dec. 6
------------------------------------------------------------
A petition to wind up the operations of Innovative Roofing Limited
will be heard before the High Court at Auckland on Dec. 6, 2024, at
10:45 a.m.
Champion Roofing Limited filed the petition against the company on
Oct. 10, 2024.
The Petitioner's solicitor is:
James Turner
c/o 23 Orion Place
Hillcrest
Auckland 0627
INSIDE THE PROJECT: Creditors' Proofs of Debt Due on Dec. 21
------------------------------------------------------------
Creditors of Inside The Project Limited are required to file their
proofs of debt by Dec. 21, 2024, to be included in the company's
dividend distribution.
The company commenced wind-up proceedings on Nov. 21, 2024.
The company's liquidator is:
Brenton Hunt
PO Box 13400
City East
Christchurch 8141
LOWREY CONSTRUCTION: Court to Hear Wind-Up Petition on Dec. 5
-------------------------------------------------------------
A petition to wind up the operations of Lowrey Construction Limited
will be heard before the High Court at Dunedin on Dec. 5, 2024, at
10:00 a.m.
The Commissioner of Inland Revenue filed the petition against the
company on Oct. 31, 2024.
The Petitioner's solicitor is:
David Tasker
Inland Revenue, Legal Services
PO Box 1782
Christchurch 8140
Q CARD: Fitch Affirms Bsf Rating on Three Tranches, Outlook Stable
------------------------------------------------------------------
Fitch Ratings has affirmed the ratings on the notes issued by The
New Zealand Guardian Trust Company Limited in its capacity as
trustee of Q Card Trust. The transaction, a securitisation of New
Zealand credit card receivables, is an asset-backed note programme
that features a multiclass structure that purchases eligible
receivables from related entities of Humm Group Limited (hummgroup)
on a revolving basis.
Entity/Debt Rating Prior
----------- ------ -----
Q Card Trust
A-2021-4 NZFPFD1043R6 LT AAAsf Affirmed AAAsf
A-2023-1 NZFPFD1046R9 LT AAAsf Affirmed AAAsf
A-2023-2 NZFPFD1049R3 LT AAAsf Affirmed AAAsf
A-2024-1 NZFPFD1056R8 LT AAAsf Affirmed AAAsf
A-2024-2 NZFPFD1062R6 LT AAAsf Affirmed AAAsf
B-2023-1 NZFPFD1045R1 LT AAsf Affirmed AAsf
B-2023-2 NZFPFD1047R7 LT AAsf Affirmed AAsf
B-2023-3 NZFPFD1051R9 LT AAsf Affirmed AAsf
B-2024-1 NZFPFD1057R6 LT AAsf Affirmed AAsf
C-2023-1 NZFPFD1048R5 LT Asf Affirmed Asf
C-2023-2 NZFPFD1052R7 LT Asf Affirmed Asf
C-2024-1 NZFPFD1058R4 LT Asf Affirmed Asf
D-2023-1 NZFPFD1053R5 LT BBBsf Affirmed BBBsf
D-2024-1 NZFPFD1059R2 LT BBBsf Affirmed BBBsf
D-2024-2 NZFPFD1063R4 LT BBBsf Affirmed BBBsf
E-2023-1 NZFPFD1054R3 LT BBsf Affirmed BBsf
E-2024-1 NZFPFD1060R0 LT BBsf Affirmed BBsf
E-2024-2 NZFPFD1064R2 LT BBsf Affirmed BBsf
F-2023-1 NZFPFD1055R0 LT Bsf Affirmed Bsf
F-2024-1 NZFPFD1061R8 LT Bsf Affirmed Bsf
F-2024-2 NZFPFD1065R9 LT Bsf Affirmed Bsf
VFN LT AAAsf Affirmed AAAsf
KEY RATING DRIVERS
Stable Steady-State Performance: Historical performance has been
steady over the past 12 months. The 12-month average gross
charge-offs were 4.5% as of end-October 2024, against 4.3% at
end-October 2023. The monthly payment rate (MPR), a measure of how
quickly consumers are paying off their credit-card debt, has
increase to 11.8%, from 11.7% over the past 12 months. Yield has
decreased to a 12-month average of 21.4%, from 23.0%.
Transaction performance is supported by New Zealand's tight labour
market, despite interest rates increasing from October 2021 through
May 2023. GDP fell by 0.2% for the year to June 2024, while
unemployment was 4.8% at end-September 2024. Fitch forecasts GDP
growth of 0.1% for 2024, rising to 2.0% in 2025, with unemployment
at 5.4% and decreasing to 5.2% next year. This reflects Fitch's
expectation that monetary easing will support economic activity.
A summary of the steady states and rating stresses is shown below;
these remain unchanged from its last review:
Charge-offs: 4.5%
MPR: 7.5%
Gross yield: 17.0%
Purchase rate: 100%
Rating Stresses:
Ratings: AAAsf / AAsf / Asf / BBBsf / BBsf / Bsf
Charge-offs (increase): 4.75x / 4.00x / 3.10x / 2.40x / 1.90x /
1.30x
MPR (% decrease): 35.00% / 30.00% / 25.00% / 20.00% / 10.00% /
5.00%
Gross yield (% decrease): 35.00% / 30.00% / 25.00% / 20.00% /
15.00% / 10.00%
Purchase rate (% decrease): 90.00% / 85.00% / 75.00% / 65.00% /
55.00% / 45.00%
Originator and Servicer Risk Mitigated: Fitch reviewed hummgroup's
originating and servicing capabilities and found that the
operations were comparable with those of other credit card
providers in Australia and New Zealand.
The key rating drivers listed in the applicable sector criteria,
but not mentioned above, are not material to this rating action.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Transaction performance may be affected by changes in market
conditions and the economic environment. Weakening asset
performance is strongly correlated with increasing levels of
delinquencies and defaults that could reduce credit enhancement
available to the notes.
Downgrade Sensitivity:
The sensitivity of the ratings to decreased yields, increased
charge-offs and decreased MPRs over the life of the transaction
were evaluated. The model indicates that note ratings are sensitive
to an increase in defaults and a reduction in MPRs, with less
sensitivity to lower yields.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An improvement in long-term asset performance, such as decreased
charge-offs, increased MPR or increased portfolio yield, driven by
a sustainable improvement in underlying asset quality, would
contribute to positive revisions in Fitch's asset assumptions. This
could result in an upgrade of the note ratings. Increased credit
enhancement ratios, which are able to fully compensate for credit
losses and cash flow stresses commensurate with higher rating
scenarios would also be positive for the ratings, all else being
equal.
Some of the outstanding subordinate tranches may be able to support
higher ratings, based on the output of Fitch's proprietary cash
flow model. Enhancement levels are set to maintain a constant
rating level per class of issued notes and may provide more than
the minimum enhancement necessary to retain issuance flexibility,
since the credit card programme is set up as a continuous funding
programme and requires that any new issuance or note reductions do
not affect the ratings of existing tranches. Therefore, Fitch may
decide not to upgrade the current ratings in anticipation of future
issuance or reductions.
Please see Fitch Affirms Q Card Trust; Outlook Stable, published 1
April 2021, for detailed sensitivities.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information as part
of its ongoing monitoring.
As part of its ongoing monitoring, Fitch reviewed a small targeted
sample of hummgroup's origination files and found the information
contained in the reviewed files to be adequately consistent with
the originator's policies and practices and the other information
provided to the agency about the asset portfolio.
Overall, and together with any assumptions referred to above,
Fitch's assessment of the information relied upon for the agency's
rating analysis, according to its applicable rating methodologies,
indicates that it is adequately reliable.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
SOLARZERO NZ: Customers Likely Stuck in Lengthy Contracts
---------------------------------------------------------
Esther Taunton at Stuff.co.nz reports that SolarZero customers are
unlikely to be able to exit their contracts early after the company
went into liquidation.
SolarZero, which owns about a third of New Zealand's solar
installations, announced the liquidation on Nov. 26, citing
"unsustainable operating losses and liquidity constraints".
According to Stuff, the company assured its roughly 15,000
customers that service would continue uninterrupted, with
replacement servicer Verofi stepping in to manage operations.
As well as allowing customers to purchase solar systems outright,
SolarZero also offered "solar subscriptions," which most people
chose, chief financial officer James Allard previously said, Stuff
relays.
With the subscription, the system would be installed with $0
upfront. SolarZero continued to own and manage the equipment and
the customer paid a fixed monthly fee for the following 25 years.
Since news of the liquidation broke, some customers had expressed
concerns about the uncertain future of the company and raised
questions about ending their contracts early.
But a Consumer NZ spokesperson said it was unlikely that would be
possible, Stuff relates.
"SolarZero customers can only terminate their contracts in specific
circumstances. They are unable to terminate their contracts simply
because Verofi is taking over the provision of the services," she
said.
"SolarZero is entitled to assign its rights and obligations under
its terms and conditions to another party [and has] advised that
'services will continue uninterrupted to customers throughout the
country with Verofi'.
"If Verofi wishes to change those terms and conditions, it would
need the agreement of customers."
SolarZero customers with concerns about their contracts or the
services provided should seek legal advice, the spokesperson, as
cited by Stuff, said.
About SolarZero
SolarZero NZ offers customers solar power systems. SolarZero is
owned by US private equity firm BlackRock and has 160 employees
across offices in Auckland, Christchurch, and Wanaka.
Russell Moore and Stephen Keen of Grant Thornton were appointed as
the company's liquidators in late November.
SOLARZERO NZ: Minister Seeks 'Urgent Advice' on NZD115MM at Risk
----------------------------------------------------------------
The New Zealand Herald reports that the Government has NZD115
million at risk from the collapse of SolarZero.
Finance Minister Nicola Willis said she was seeking urgent advice
on the SolarZero situation, NZ Heral relates.
SolarZero NZ offers customers solar power systems. SolarZero is
owned by US private equity firm BlackRock and has 160 employees
across offices in Auckland, Christchurch, and Wanaka.
Russell Moore and Stephen Keen of Grant Thornton were appointed as
the company's liquidators in late November.
SUSTAINABLE FOODS: Creditors' Proofs of Debt Due on Jan. 22
-----------------------------------------------------------
Creditors of Sustainable Foods Limited are required to file their
proofs of debt by Jan. 22, 2025, to be included in the company's
dividend distribution.
The company commenced wind-up proceedings on Aug. 23, 2024.
The company's liquidators are:
Malcolm Hollis
Richard Nacey
C/o PwC Christchurch
PO Box 13244
City East
Christchurch 8141
TVNZ: Confirms Plans to Axe Roles but Quiet on Numbers
------------------------------------------------------
Radio New Zealand reports that TVNZ has confirmed plans to axe
roles within its organisation but is remaining tight-lipped on
numbers.
According to RNZ, The government-owned broadcaster previously
proposed job cuts to 50 roles including reducing its news and
current affairs unit as a move to save NZD30 million.
RNZ relates that the proposal included reducing the number of its
presenters on Breakfast from four to two and removing four of its
camera operators.
The broadcaster confirmed with staff on Nov. 28 which proposed
roles would go ahead and those that would not.
TVNZ said it will now recruit internally to support the new
structure.
Television New Zealand (TVNZ) is a government-owned media company
that operates six channels in New Zealand and parts of the Pacific
region.
=================
S I N G A P O R E
=================
ALTERA INFRASTRUCTURE: Creditors' Proofs of Debt Due on Dec. 27
---------------------------------------------------------------
Creditors of Altera Infrastructure Holdings Pte. Ltd. are required
to file their proofs of debt by Dec. 27, 2024, to be included in
the company's dividend distribution.
The company commenced wind-up proceedings on Nov. 22, 2024.
The company's liquidators are:
Sam Kok Weng
c/o 7 Straits View
Marina One East Tower, Level 12
Singapore 018936
ARMADA 98/2: Moody's Ups Rating on Senior Secured Term Loan to B1
-----------------------------------------------------------------
Moody's Ratings has upgraded Armada 98/2 Pte. Ltd.'s senior secured
term loan rating to B1 from B2, and maintained the stable outlook.
The underlying senior secured term loan has an 8.5-year term and is
set to fully amortize by its final maturity in July 2031. Armada
98/2, a special purpose entity based in Singapore, owns the
floating production storage and offloading (FPSO) unit Armada
Sterling V. Armada 98/2 is 70% owned by Shapoorji Pallonji Energy
Pvt Ltd (SPEPL) and 30% by Bumi Armada Offshore Holdings Ltd
(BAOHL).
The FPSO unit, tailored specifically for the KG-DWN 98/2 offshore
oil field in India (Baa3 stable), is chartered to Oil and Natural
Gas Corporation Ltd. (ONGC, Baa3 stable), the operator of the oil
field. Shapoorji Pallonji Bumi Armada Godavari Pvt. Ltd. (SPBAG),
an affiliate of Armada 98/2, acts as the intermediary charterer
between the project company and ONGC. The FPSO is leased to SPBAG
through a bareboat charter and SPBAG sub-leases it to ONGC through
a time charter. SPBAG is also the operator of the FPSO unit.
RATINGS RATIONALE
"The upgrade of the long-term secured term loan rating reflects the
final acceptance granted by offtaker ONGC in July 2024, which
addressed completion and ramp-up risks. The Armada Sterling V FPSO
unit has stable operations since commencement of operations in
January 2024 and Moody's expect it to continue to deliver solid
performance over its charter period. The upgrade also considers the
completion of the refinancing of a sizable debt at the shareholder
level above BAOHL," says Erman Zhang, a Moody's Ratings Analyst.
Armada 98/2's credit quality will continue to be supported by
credit strengths such as the cash flow underpinned by
availability-based charter hire; and the strong market position and
attractive economics of the oil field. However, the credit quality
is also constrained by (1) high financial leverage; (2) the short
operating track record; (3) structural features in the transaction,
which are weaker than those of other projects and expose the
project to risks at the shareholders and operator; and (4) debt and
maintenance reserves, which are lower than what would be expected
for corresponding projects.
Armada 98/2 generates its revenue from the ultimate off-taker ONGC,
which is India's largest integrated oil and gas company with a
strong credit quality. A fixed day rate is payable by ONGC, subject
to certain availability deduction events. The net time charter
hire, after deducting operating retention for SPBAG's operation and
maintenance (O&M) costs, is fully remitted to Armada 98/2,
insulating it from commodity volume or price fluctuations.
Armada 98/2's FPSO unit holds a strong market position within its
service domain, being the only FPSO designed and built to align
with the characteristics of the Block KG – DWN 98/2 oil field.
This exclusive status renders it a critical infrastructure asset
for the successful development and production of oil and gas in the
block, which is a strategically important field for ONGC.
The rating factors in the high leverage profile of the project as
the average debt service coverage ratio (DSCR) for the remaining
life of the loan stands in the range of 1.15x-1.30x. This
constrains the capacity for additional expenses if the projects
encounter any operational issues attributable to the project
company. The project is also exposed to interest rate risk, given
the current absence of any interest rate hedging arrangement.
The rating also considers the project's dependence on a single
asset and relatively short operational track record. The rating
upgrade reflects the alleviation of construction and ramp-up risks
related to the incompletion of subsea infrastructure that the
project had been facing, following the issuance of final acceptance
by ONGC. The project's operational track record remains fairly
limited because it started operations only in January 2024. Moody's
also recognize that Armada 98/2's two sponsors – SPEPL and BAOHL
– have a history of collaboration on FPSO construction,
conversion, ownership, and operation.
Armada 98/2's structural features are weaker than its peers because
of the absence of termination rights and a time charter, as well as
SPBAG's dual capacity as both the intermediate charterer and
operator of the FPSO unit, with Armada 98/2 being the sole obligor
under the facility agreement. Moody's analysis of Armada 98/2's
credit quality considers SPBAG as an integral part of the
structure. A prolonged underperformance by SPBAG could increase the
project's exposure to operating risk. However, this could partly be
mitigated by several factors, including an annual downtime
allowance of seven days, design margins in the FPSO's nameplate
capacities, a debt service reserve requirement and the lender's
step-in rights in case of SPBAG's prolonged underperformance.
The facility agreement incorporates cross-default provisions
between Armada 98/2 and its two sponsors. This feature potentially
introduces credit risks. Currently, the two sponsors' standalone
books carry no external borrowings, but there are no covenants to
prevent the sponsors from incurring any financial indebtedness in
the future.
Moody's expect the liquidity of the project to be lower than its
peers' because the shorter tenor for debt service reserve account
(DSRA) requirement and the lack of an operation and maintenance
reserve account.
OUTLOOK
The stable outlook reflects Moody's expectation that the project
will operate as per the contracted availability level and
parameters, leading to average DSCRs in the range of 1.15-1.30x,
and that the economics of the oil field will remain attractive to
ONGC.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
Moody's could upgrade the rating if (1) the project delivers a
stable operating performance with an availability level that
exceeds 98% on a sustained basis, (2) the project finalizes
interest rate hedging arrangements, or (3) there is increased
transparency or improvement in the sponsors' credit profiles.
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
Moody's could downgrade the rating if (1) the projected financial
metrics drop to levels below Moody's base case expectation,
including the average DSCR remaining consistently below 1.15x
during the amortization period, potentially because of weaker
operational performance that cannot be accommodated within the
available contractual or insurance protections, a higher debt load
or additional operating costs incurred that cannot be passed
through to off-takers; (2) the willingness or ability of the
sponsors to provide support is reduced; (3) BAOHL or SPEPL incurs
external debt on a standalone basis.
ISSUER PROFILE
Armada 98/2 Pte. Ltd. is a special purpose entity established in
Singapore that owns the Armada Sterling V floating production
storage and offloading (FPSO) unit, which carries a production
capacity of 51,000 barrels of oil equivalent per day (boed) and a
storage capacity of 700,000 barrels of oil. The vessel was
specifically designed and fit to the characteristics of the
KG-DWN-98/2 oil field of the Krishana-Godavari basin, which is
located 22 kilometers off the east coast India.
Armada 98/2 is 70% owned by Shapoorji Pallonji Energy Pvt Ltd
(SPEPL) and 30% by Bumi Armada Offshore Holdings Ltd (BAOHL). BAOHL
is a 100%-owned subsidiary of Bumi Armada Berhad (BAB), a Malaysian
listed entity. Oil and Natural Gas Corporation Ltd. (ONGC) holds
the concession rights to operate the oil field and entered into an
FPSO time charter contract with Shapoorji Pallonji Bumi Armada
Godavari Pvt. Ltd (SPBAG) in July 2019. SPBAG is an Indian company
that is 70% held by SPEPL and 30% by BAOHL. SPBAG, in turn, has
entered into a bareboat charter agreement with Armada 98/2 for the
dry lease of the fully converted and mobilized Armada Sterling V.
METHODOLOGY
The principal methodology used in this rating was Generic Project
Finance published in October 2024.
GRAB HOLDINGS: Moody's Hikes CFR to B1, Outlook Remains Positive
----------------------------------------------------------------
Moody's Ratings has upgraded the corporate family rating of Grab
Holdings Inc. to B1 from B2 and maintained the positive outlook.
"The rating upgrade reflects Moody's view that Grab will generate
positive earnings and cash flows on a sustained basis. Although its
nascent digital banking operations are currently incurring losses,
this is balanced by the strong performance of Grab's ride-hailing
and delivery businesses as well as its conservative financial
policies and substantial cash holdings," says Yu Sheng Tay, a
Moody's Ratings Assistant Vice President and Analyst.
"The positive outlook reflects Moody's expectation that Grab's
credit quality will continue to improve on the back of ongoing
growth in its scale, earnings and free cash flows over the next 12
months. Moody's also expect the company to execute its growth
strategy prudently and maintain very good liquidity," adds Tay.
Governance considerations are a key driver of the rating action.
Moody's view that Grab's prudent approach towards growth and its
strong balance sheet reflect an improvement in its financial
strategy and risk management, a credit positive.
RATINGS RATIONALE
Grab is on a path to sustained profitability and free cash flow
generation, supported by its position as a leading provider of
ride-hailing and delivery services in Southeast Asia.
Moody's believe Grab's scale will grow in tandem with the increase
in internet penetration and adoption of digital platforms in the
region. At the same time, the company will continue to roll out new
products and services that will help retain and attract users to
its platform.
Grab has also demonstrated robust financial policies by balancing
its growth ambitions and profitability. The company recorded a 15%
growth in gross merchandize value in the first nine months of the
year while reducing its costs. Consequently, Grab is poised to
achieve its first full year of positive Moody's-adjusted EBITDA and
free cash flow in 2024.
Looking ahead, Moody's expect Grab's adjusted EBITDA (including
share-based compensation) to rise to around $260 million in 2025
and $420 million in 2026 from $142 million in the 12 months ended
September 2024. Its free cash flow (before changes in customer
deposits and loan receivables) will rise to $350 million-$510
million from $243 million over the same period.
The B1 rating also considers risks stemming from Grab's nascent
digital banking operations in Singapore, Malaysia and Indonesia.
The financial services segment is currently loss-making and Grab
targets this business to achieve breakeven EBITDA by the end of
2026. The financial services business has already achieved strong
growth in customer deposits and launched its lending products in
Malaysia and Indonesia earlier this year. However, competition
against traditional lenders and financial technology firms could
result in delays to its breakeven timeline or steeper losses.
Nonetheless, Moody's expect Grab to pursue growth at its financial
services segment prudently by focusing on lending to existing users
of its platform to minimize customer acquisition costs and credit
risk.
The rating reflects Grab's exposure to the evolving legal and
regulatory framework in its key markets. It also considers the
company's complex corporate structure, which stems from partial
ownership stakes in several of its operating entities.
Grab has very good liquidity and a strong balance sheet with a net
cash position. It had unrestricted cash balances and short-term
deposits of $4.4 billion (excluding customer deposits of $1.1
billion), compared with just $328 million of debt as of September
2024.
Grab's liquidity is further bolstered by around $758 million of
non-current time deposits and investments. These large cash sources
are more than sufficient to cover the company's debt maturities,
planned share buybacks and capital expenditures. At the same time,
the sources also provide the company considerable financial
flexibility to withstand losses associated with the ramp-up of its
digital banking operations as well as capitalize on inorganic
growth opportunities.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CONSIDERATIONS
Moody's have changed Grab's Credit Impact Score (CIS) to CIS-3 from
CIS-4 reflecting Moody's view that while ESG considerations exhibit
potential for greater negative impact over time, they have an
overall limited impact on the company's current rating.
Grab's rating reflects the risks to its growth strategy, its
complex organizational structure and key-person risk, although its
financial policies and long-term industry tailwinds, given the
increasing adoption of ride-hailing, food delivery and digital
financial services in Southeast Asia, mitigate these risks.
Moody's revised Grab's governance issuer profile score to G-3 from
G-4, reflecting Moody's assessment of improved financial strategy
and risk management. The company's sizable cash buffers and
commitment to cost discipline and profitable growth help to offset
the risks pertaining to Grab's investments in the nascent digital
banking sector and its acquisitive appetite.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
Moody's would upgrade Grab's rating if it maintains its leading
market position in mobility and delivery services; improves its
revenue, earnings, margins and free cash flow; reduces its losses
as it ramps up its financial services business; demonstrates
prudent financial policies particularly in terms of acquisitions
and investments; and maintains very good liquidity.
Given the positive outlook, a rating downgrade is unlikely.
However, Moody's could revise the outlook to stable if Grab's
market position in mobility and delivery services erodes, such that
its revenue and earnings deteriorate; losses at its financial
services segment increase further; the company has insufficient
liquidity to fund its operations and investments; or if it deviates
from its prudent financial policies and pursues growth aggressively
or undertakes large shareholder returns.
The principal methodology used in this rating was Business and
Consumer Services published in November 2021.
Grab was founded in 2012 and provides ride-hailing, delivery and
digital financial services in Southeast Asia. The company also
provides digital banking services in Singapore, Malaysia and
Indonesia. Grab listed on the NASDAQ in December 2021.
HARBORAIR LOGISTICS: Court Enters Wind-Up Order
-----------------------------------------------
The High Court of Singapore entered an order on Nov. 15, 2024, to
wind up the operations of Harborair Logistics Pte. Ltd.
Maybank Singapore Limited filed the petition against the company.
The company's liquidator is:
Gary Loh Weng Fatt
BDO Advisory Pte Ltd
600 North Bridge Road
#23-01 Parkview Square
Singapore 188778
HARBOUR HANDLERS: Court Enters Wind-Up Order
--------------------------------------------
The High Court of Singapore entered an order on Nov. 15, 2024, to
wind up the operations of Harbour Handlers (Private) Limited.
Maybank Singapore Limited filed the petition against the company.
The company's liquidator is:
Gary Loh Weng Fatt
BDO Advisory Pte Ltd
600 North Bridge Road
#23-01 Parkview Square
Singapore 188778
HONTOP ENERGY: Court to Hear Wind-Up Petition on Jan. 21
--------------------------------------------------------
A petition to wind up the operations of Hontop Energy (Singapore)
Pte. Ltd. will be heard before the High Court of Singapore on Jan.
21, 2025, at 10:00 a.m.
Lin Yueh Hung and Oon Su Sun, the joint and several Judicial
Managers of Hontop Energy, filed the petition against the company
on Oct. 30, 2024.
The Petitioner's solicitors are:
Rajah & Tann Singapore LLP
9 Straits View
#06-07 Marina One West Tower
Singapore 018937
MAXEON SOLAR: Linden, 3 Others Cease Ownership of Ordinary Shares
-----------------------------------------------------------------
Linden Capital L.P. disclosed in a Schedule 13G/A filed with the
U.S. Securities and Exchange Commission that as of Sept. 30, 2024,
the firm and its affiliates -- Linden Advisors LP, Linden GP LLC,
and Mr. Siu Min (Joe) Wong -- have ceased to be the beneficial
owner of more than five percent of Maxeon Solar Technologies,
Ltd.'s Ordinary Shares.
Linden Capital may be reached at:
Saul Ahn
General Counsel
Victoria Place, 31 Victoria Street
Hamilton D0 HM10
Tel: 441-294-3202
A full-text copy of Linden Capital's SEC Report is available at:
https://tinyurl.com/2dzr2c8j
About Maxeon Solar
Maxeon Solar Technologies, Ltd. is a Singapore-based company that
designs and manufactures photovoltaic panels. The company was
previously a division of the American SunPower company before it
was spun off in August 2020. Maxeon is still the primary provider
of solar panels for SunPower.
Singapore-based Ernst & Young LLP, the Company's auditor since
2020, issued a "going concern" qualification in its report dated
May 30, 2024, citing that the Company has suffered recurring losses
from operations and negative free cash flows and has stated that
substantial doubt exists about the Company's ability to continue as
a going concern.
As of December 31, 2023, the Company had $1 billion in total
assets, $997.4 million in total liabilities, and $4.6 million in
total equity.
URBAN RENEWABLES: Court to Hear Wind-Up Petition on Dec. 11
-----------------------------------------------------------
A petition to wind up the operations of Urban Renewables Pte. Ltd.
will be heard before the High Court of Singapore on Dec. 11, 2024,
at 10:00 a.m.
Tomson Pte. Ltd. filed the petition against the company on Oct. 21,
2024.
The Petitioner's solicitors are:
TSMP Law Corporation
6 Battery Road
Level 5
Singapore 049909
===============
T H A I L A N D
===============
DAOL SECURITIES: Fitch Lowers National LongTerm Rating to 'BB(tha)'
-------------------------------------------------------------------
Fitch Ratings has downgraded DAOL Securities (Thailand) Public
Company Limited's (DAOLSEC) National Long-Term Rating to 'BB(tha)',
from 'BB+(tha)', and the National Long-Term Rating of its
subordinated unsecured debentures to 'BB-(tha)', from 'BB(tha)'.
The Outlook is Stable. At the same time, the agency has affirmed
the National Short-Term Rating at 'B(tha)'.
Key Rating Drivers
Weakened Credit Profile: The downgrade is based on DAOLSEC's
persistently weak earnings as well as underperformance compared
with securities sector peers and against Fitch's expectations. The
assessment takes into account DAOLSEC's credit profile relative to
that of other Fitch-rated entities on the Thai national scale.
Weaker Earnings; Slow Recovery: Fitch expects pressure on
profitability to persist given DAOLSEC's volatile revenue and high
cost base. DAOLSEC remains unprofitable, with annualised operating
profit/average equity of -21.4% in 1H24 (2023: -37.8%). This is
partly due to weak market sentiment, but DAOLSEC's earnings ratio
was also substantially weaker than the sector average of 1.2% in
1H24, reflecting challenges in its franchise and execution.
Difficult Operating Environment: Thai securities firms have been
affected by weak stock market conditions, with muted trading value
and poor investor sentiment over the past two years. Stock market
trading volume for 9M24 declined by around 16% year-on-year and
equity IPOs also plummeted. Signs of market improvement since 3Q24
could support better industry performance, if sustained.
Nonetheless, Fitch expects market activity to remain cyclical, and
persistently lackluster trading conditions would pressure
securities firms' credit profiles.
Limited Scale and Franchise: DAOLSEC's market presence remains
small, with an equity brokerage market share of 0.8% in 9M24 (2023:
0.9%). Non-brokerage revenue, particularly in bond underwriting and
wealth-management services, accounted for approximately 74% of
total revenue in 1H24 (2023: 67%), slightly higher than the sector
average of 70%. Despite this, the company's revenue has been
volatile, reflecting its lack of scale and vulnerability to market
fluctuations.
Provisioning Risk Remains: The company's large non-performing
receivables include its exposure to the industry's settlement
failure event in late 2022, with an unprovided balance accounting
for 35% of equity at end-June 2024. Further provisioning remains a
risk, as legal proceedings are ongoing. The company raised capital
in 2023 and 1H24 to strengthen its loss-absorption capacity against
downside risk.
Increased Capital Still at Risk: Fitch believes DAOLSEC continues
to face capital impairment risk, due to its persistently weak
earnings and provisioning uncertainty. This is despite an improved
capital position following shareholder equity injections of THB240
million in April 2024 and THB400 million in March 2023, which saw
the net adjusted leverage ratio decline to 3.1x by 1H24 (2023:
4.0x; 2022: 5.9x). DAOLSEC's small capital base relative to
regulatory requirements also limits its buffer against shocks.
DAOLSEC is ultimately 88%-owned by Korea-based DAOL Investment &
Securities Co., Ltd. The parent group has provided additional
resources to support DAOLSEC's capital needs in recent years.
Nonetheless, Fitch does not incorporate extraordinary support into
DAOLSEC's ratings, as the agency believes that the company's
strategic importance to DAOL group is uncertain.
Reliance on Wholesale Funding: DAOLSEC's liquidity coverage ratio,
measured by liquid assets/short-term funding, stood at 0.6x at
end-1H24, below that of Fitch-rated peers. The company has
outstanding subordinated debentures that support its regulatory net
liquid capital ratio, but there is some reliance on wholesale
funding conditions to refinance upcoming maturities. The company's
undrawn bank facilities provide some mitigation against refinancing
risk.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Further large deterioration in DAOLSEC's financial profile could
result in negative rating action. For example, a substantial
weakening in its capital position, with Fitch projecting tangible
assets/tangible equity to exceed 5.0x for a sustained period (June
2024: 3.1x), or an inability to turn around the company's
loss-making operation.
Further developments that demonstrate material damage to client and
creditor confidence could also lead to negative rating action.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade appears less likely in the near term, given recent
performance trends. Over the medium-term, there may be positive
rating action if the company's financial performance improves
substantially, such as if it resolves its large impaired exposure
without meaningful additional provisioning, or if average operating
profit/average equity can be maintained above 5.0% for several
years without a significant rise in risk.
DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS
The rating on the subordinated debentures is one notch below the
National Long-Term Rating. This reflects the instruments' higher
loss-severity risk relative to senior unsecured instruments, as
subordinated noteholders rank after senior creditors in the
priority of claims.
There is no additional notching for non-performance risk, as the
notes do not incorporate going-concern loss absorption or
equity-conversion features. Fitch has not assigned any equity
credit to the issue, as the instrument is not designed to be a
permanent part of the company's capital structure.
DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES
Any changes to DAOLSEC's National Long-Term Rating are likely to
result in corresponding action on the rating of the subordinated
debentures.
Entity/Debt Rating Prior
----------- ------ -----
DAOL Securities
(Thailand) Public
Company Limited Natl LT BB(tha) Downgrade BB+(tha)
Natl ST B(tha) Affirmed B(tha)
Subordinated Natl LT BB-(tha) Downgrade BB(tha)
=============
V I E T N A M
=============
ANZ BANK (VIETNAM): Fitch Affirms ‘BB+’ Foreign Currency IDR
----------------------------------------------------------------
Fitch Ratings has affirmed ANZ Bank (Vietnam) Limited's (ANZVL)
Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB+' and
its Long-Term Local-Currency IDR at 'BBB'. The Outlook is Stable.
At the same time, Fitch has affirmed the Short-Term
Foreign-Currency IDR at 'B', Short-Term Local-Currency IDR at 'F2'
and the Shareholder Support Rating (SSR) at 'bb+'.
Key Rating Drivers
Shareholder Support Drives Ratings: The Long-Term IDRs are
underpinned by its expectation of support from ANZVL's 100% parent,
Australia and New Zealand Banking Group Limited (ANZ,
AA-/Stable/a+), if required. The ratings take into consideration
the high reputational risk that ANZ would face if ANZVL were to
default and ANZVL's close operational and managerial integration
with the group.
ANZ's propensity to support its Vietnam's subsidiary is, however,
counterbalanced by its assessment of transfer and convertibility
risk in Vietnam (BB+/Stable), as indicated by the Country Ceiling
of 'BB+'. This constrains the SSR. Fitch has not assigned a
Viability Rating to ANZVL, as the high operational linkages with
its parent render a standalone assessment less meaningful. Instead,
Fitch uses ANZ's Viability Rating as the anchor rating for
shareholder support, as it is unclear whether the qualifying junior
debt buffers built by ANZ would be pre-placed or effectively
available to support ANZVL's senior creditors.
Rising Strategic Importance: ANZVL's key function is to service the
banking needs of ANZ group clients in Vietnam and Fitch believes
the subsidiary will be able to leverage the group's solid regional
franchise to capture rising banking business volume from sustained
foreign direct investment into the country. ANZVL's share of
Vietnam's system assets is modest, at less than 1%, but this
reflects the bank's asset-light business model that is focused on
cash management, treasury, trade finance and offshore capital
markets rather than local balance-sheet lending.
Lower Risk of Local-Currency Repayment: ANZVL's Long-Term
Local-Currency IDR is two notches above Vietnam's sovereign rating.
This reflects its view that the sovereign is less likely to impose
restrictions on the parent's support for ANZVL's local-currency
obligations, even if the sovereign comes under distress.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The SSR is sensitive to Vietnam's Country Ceiling, sovereign rating
and the rating Outlook. Any downward revision is likely to lead to
similar revisions in the SSR, Long-Term IDRs and Outlook for ANZVL.
The Short-Term Local-Currency IDR will be downgraded if the
Long-Term Local-Currency IDR is downgraded.
ANZ's VR is six notches above Vietnam's Country Ceiling. A
substantial reduction in its assessment of ANZ's ability or
propensity to support ANZVL would have to occur before the
subsidiary's support-driven rating is affected, assuming no changes
to Vietnam's Country Ceiling, sovereign rating or the rating
Outlook. Fitch sees this as unlikely in the near to medium term.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
ANZVL's ratings are constrained by Vietnam's sovereign rating and
Country Ceiling. Any upward revision in the sovereign rating and
Country Ceiling would be likely to lead to a corresponding revision
in the bank's SSR and Long-Term Foreign Currency IDR, assuming the
parent's ability and propensity to support the bank remain intact.
The Long-Term Local-Currency IDR is two notches above the Country
Ceiling; whether a higher Country Ceiling will lead to an upgrade
is subject to review.
The Short-Term IDRs will be upgraded if the Long-Term IDRs are
upgraded.
Public Ratings with Credit Linkage to other ratings
ANZVL's ratings are linked to Vietnam's sovereign rating and ANZ's
ratings.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
ANZ Bank (Vietnam)
Limited LT IDR BB+ Affirmed BB+
ST IDR B Affirmed B
LC LT IDR BBB Affirmed BBB
LC ST IDR F2 Affirmed F2
Shareholder Support bb+ Affirmed bb+
ASIA COMMERCIAL: Fitch Alters Outlook on 'BB-' LongTerm IDR to Pos.
-------------------------------------------------------------------
Fitch Ratings has revised the Outlook on Asia Commercial Joint
Stock Bank's (ACB) Long-Term Issuer Default Rating (IDR) to
Positive from Stable, while affirming the Long-Term
Foreign-Currency IDR at 'BB-'. At the same time, the agency has
affirmed the Viability Rating (VR) at 'bb-' and Government Support
Rating (GSR) at 'bb-', and assigned a Long-Term Local-Currency IDR
of 'BB-' with a Positive Outlook.
Key Rating Drivers
Improving Standalone Credit Profile: ACB's Long-Term IDRs are
driven by its VR, which reflects its standalone credit strength.
The Positive Outlook reflects its expectation that its
asset-quality metrics are likely to improve over the next 12-18
months, underpinned by the supportive economic environment and the
bank's consistent underwriting standards. The ratings also factor
in ACB's steady funding profile as well as its above-average
profitability and capital buffers that help to mitigate risks
associated with its brisk credit growth.
Strong Economic Performance: Vietnam's economy grew by 6.8% in 9M24
(2023: 5.1%) and Fitch forecasts GDP growth to be sustained at
around 6.5% in 2025-2026. This sets up a conducive operating
environment for banks, generating business growth opportunities and
ameliorating asset-quality risks as the domestic real-estate market
and consumer sentiments recover.
Retail-Centric Bank: ACB is a medium-sized bank with about 4%
market share of system assets and deposits. Retail loans and
deposits make up more than 65% and 80% of its total loans and
deposits, respectively, which is the highest among its local
private-sector rated peers. The bank's focus on higher-income
retail clients in the southern region of Vietnam has allowed it to
generate quality business volumes over the years and Fitch expects
it to remain largely retail-centric, even as it selectively tries
to grow its corporate book.
Peaking NPL Formation: ACB's non-performing loan (NPL) ratio rose
to 1.5% by September 2024 from 1.2% at end-2023, driven by
impairments in the retail segment. The ratio, nevertheless,
remained lower than the industry and rated peer average, which
Fitch believes reflects the bank's better client selection, and
Fitch expects these metrics to recover next year. Therefore, Fitch
has revised the outlook on the asset-quality score to positive from
negative, while affirming the score at 'bb-'.
Mild Deterioration in Profitability: ACB's operating
profit/risk-weighted asset (RWA) ratio declined to 3.3% in 9M24
from 3.7% in 2023 on a narrowing net interest margin and lower
trading gains. Fitch expects its profitability to recover in 2025,
as asset yields improve with a recovery in demand for
higher-yielding retail loans and market-related income grows in
tandem with sustained market volatility.
Adequate Capital Buffers: ACB's Fitch Core Capitalisation ratio
declined to 12.3% by September 2024, from 12.8% at end-2023, on
rapid RWA growth. Capital accretion is likely to be relatively
modest over the next 12-18 months as the bank ramps up lending,
although Fitch expects it to maintain core capitalisation that is
higher than its rated peers' average, helped by its improved
internal capital generation.
Largely Deposit Funded: The bank's loan-to-deposit (LDR) ratio
inched up to 99% by September 2024 from 98% at end-2023, in line
with similar developments in the sector. The LDR may edge up
further as the loan book expands quickly, although Fitch expects
its liquidity metrics to remain broadly commensurate with the
assigned score. Moreover, Fitch expects the funding profile to
remain broadly steady, with customer deposits making up about 83%
of its total funding.
Government Support: Fitch believes the authorities have a strong
propensity to support Vietnam's banking system because of the
sector's importance to the economy. However, Fitch sees the
likelihood of support for ACB as being lower than that for its
larger peers because of its lower systemic importance. This
underpins the GSR of 'bb-', which is two notches below the
sovereign rating (BB+/Stable).
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Fitch may downgrade the bank's VR should Fitch sees significant
deterioration in its asset quality and profitability metrics, such
as if the NPL ratio rises significantly above 3.5% and operating
profit/RWA declines below 2% over a sustained period. Excessive
credit growth that is accompanied by a decline in capital buffers
would also pressure the VR.
A downgrade in the VR will not lead to an immediate downgrade in
the bank's Long-Term IDR, unless its GSR was also downgraded. The
GSR could be downgraded upon a downgrade of the sovereign rating.
The Short-Term IDR is unlikely to be downgraded unless the
Long-Term IDR is downgraded by four or more notches.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Fitch may upgrade the VR if the bank is able to sustain its
asset-quality performance, assuming the bank's other financial
metrics remain intact.
A sovereign rating upgrade may lead to a similar upward revision of
ACB's GSR, assuming the state's propensity to support the bank
remains unchanged. Any upgrade in the GSR or VR will result in an
upgrade of the Long-Term IDR.
The Short-Term IDR is unlikely to be upgraded unless the Long-Term
IDR is upgraded by three or more notches.
VR ADJUSTMENTS
The operating environment score has been assigned above the implied
score for the following adjustment: economic performance
(positive).
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Asia Commercial
Joint Stock Bank LT IDR BB- Affirmed BB-
ST IDR B Affirmed B
LC LT IDR BB- New Rating
LC ST IDR B New Rating
Viability bb- Affirmed bb-
Government Support bb- Affirmed bb-
HSBC BANK (VIETNAM): Fitch Affirms ‘BB+’ Foreign Currency IDR
-----------------------------------------------------------------
Fitch Ratings has affirmed HSBC Bank (Vietnam) Ltd.'s (HSBCV)
Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB+' and
its Long-Term Local-Currency IDR at 'BBB'. The Outlook is Stable.
At the same time, Fitch has affirmed the Short-Term IDR at 'B',
Short-Term Local-Currency IDR at 'F2' and the Shareholder Support
Rating (SSR) at 'bb+'.
Key Rating Drivers
Parental Support Underpins Ratings: HSBCV's Long-Term IDRs are
driven by its expectation of support from its 100% parent, The
Hongkong and Shanghai Banking Corporation Limited (HKSB,
AA-/Stable/a+). Its view takes into consideration HSBCV's growing
strategic importance and strong operational and management
integration with its parent. Fitch also takes into account the high
reputational risk to HKSB and HSBC Group should HSBCV default.
HKSB's propensity and ability to support HSBCV is counterbalanced
by transfer and convertibility risks in Vietnam, as indicated by
the Country Ceiling of 'BB+', which constrains the SSR. Fitch uses
HKSB's Viability Rating instead of its IDR as the anchor rating for
shareholder support. This is because Fitch does not think HSBCV
would benefit from the parent's qualifying junior debt buffer, as
it is not a material entity under the group's resolution framework.
Fitch has also not assigned a Viability Rating to HSBCV because of
the high operational linkages with its parent, which render a
standalone assessment less meaningful.
Operating in Strategic Market: HSBCV is likely to continue to be a
key beneficiary of sustained trade and foreign direct investment
inflow into Vietnam, given the bank's strong international banking
franchise. HSBCV's contribution to its parent's revenue and profit
remains modest at less than 1.5%, though Fitch expects this to rise
over the medium term on the bank's strong growth prospects.
Lower Local-Currency Risk than Foreign: HSBCV's Long-Term
Local-Currency IDR is two notches above Vietnam's sovereign rating
(BB+/Stable). This reflects its belief that there is a lower
likelihood of the sovereign restricting parental support for
HSBCV's local-currency obligations relative to foreign-currency
ones even if the sovereign is in distress.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The SSR is sensitive to movements in Vietnam's Country Ceiling,
sovereign rating and rating Outlook. Any downward revision is
likely to lead to a similar revision in the SSR, Long-Term IDRs and
Outlook for HSBCV. The Short-Term Local-Currency IDR will be
downgraded if the Long-Term Local-Currency IDR is downgraded.
HKSB's Viability Rating is six notches above Vietnam's Country
Ceiling. Fitch would need to substantially revise down its
assessment of HKSB's ability or propensity to support HSBCV before
the subsidiary's support-driven rating is affected. Fitch sees this
as unlikely in the near to medium term.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
The bank's ratings are constrained by Vietnam's sovereign rating
and Country Ceiling. An upward revision in the sovereign rating and
Country Ceiling would be likely to lead to a corresponding revision
in the bank's SSR and Long-Term Foreign-Currency IDR, assuming the
parent's ability and propensity to support the bank remain intact.
HSBCV's Long-Term Local-Currency IDR is two notches above the
Country Ceiling; whether a higher Country Ceiling would lead to an
upgrade would be subject to further review at that time.
The Short-Term IDRs will be upgraded if the Long-Term IDRs are
upgraded.
Public Ratings with Credit Linkage to other ratings
HSBCV's ratings are linked to Vietnam's sovereign rating and HKSB's
ratings.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
HSBC Bank
(Vietnam) Ltd. LT IDR BB+ Affirmed BB+
ST IDR B Affirmed B
LC LT IDR BBB Affirmed BBB
LC ST IDR F2 Affirmed F2
Shareholder Support bb+ Affirmed bb+
MB SHINSEI FINANCE: Fitch Ups LongTerm IDR to 'B+', Outlook Stable
------------------------------------------------------------------
Fitch Ratings has upgraded Vietnam-based MB Shinsei Finance Limited
Liability Company's (Mcredit) Long-Term Issuer Default Rating (IDR)
to 'B+', from 'B'. The Outlook is Stable. Fitch has also upgraded
the Shareholder Support Rating (SSR) to 'b+', from 'b', and
affirmed the Short-Term IDR at 'B'.
The rating action follows the upgrade of the Viability Rating (VR)
of Mcredit's parent and largest shareholder, Military Commercial
Joint Stock Bank (MB, BB/Stable/bb-) to 'bb-', from 'b+'. MB's VR
upgrade reflects its improved capitalisation and overall standalone
credit profile. See Fitch Upgrades Vietnam's Military Bank's VR to
'bb-', Affirms IDR at 'BB'; Outlook Stable for details.
MB's VR indicates its ability to provide support to its
subsidiaries and serves as the anchor for Mcredit's ratings, which
are based on its expectation of extraordinary support from MB in
times of need.
Key Rating Drivers
Parent VR Upgrade Drives Ratings: The upgrade of Mcredit's ratings
is driven by the upgrade of MB's VR, which denotes an improved
standalone credit profile for the parent bank and a strengthened
ability to support its subsidiary. Fitch regards Mcredit as MB's
strategically important subsidiary, due to its complementary role
in serving retail clients outside the parent bank's typical target
market. This, together with MB's 50% ownership of Mcredit, explains
the one-notch differential between Mcredit's Long-Term IDR and MB's
VR.
Mcredit's ratings do not include any benefit from potential
government support, as incorporated in MB's Long-Term IDR, as it is
less certain if state support would be extended to the smaller
consumer finance subsidiary.
Synergistic Role: Mcredit serves as MB's consumer finance arm with
a focus on lower-income borrowers. This broadens the parent bank's
retail coverage to a client segment that may eventually qualify for
banking products as their incomes rise. The group cross-sells
deposits offered by Mcredit to MB's corporate customers, which may
also improve customer satisfaction and loyalty. Corporate deposits
accounted for 27% of Mcredit's total funding at end-September 2024
(end-2023: 19%), albeit an insignificant 3% relative to MB's
non-retail customer deposits.
Funding Support: MB's propensity to support Mcredit is demonstrated
by its steady provision of funding to its subsidiary. Credit limits
from the bank have risen every year since Mcredit's incorporation,
with utilised funding from MB forming 24% of the subsidiary's total
borrowings at end-September 2024 (end-2023: 23%). Fitch expects
funding support from MB to continue, albeit in the form of
contingent funding as Mcredit continues to diversify its funding
towards unrelated parties.
Integration Fortifies Reputational Links: MB mostly appoints
Mcredit's management team, including the CEO and several deputy
CEOs, while the board is chaired by MB's vice chairwoman. The
parent also collaborates with Mcredit in customer acquisition
through referrals and by marketing consumer finance products on
MB's mobile app. Fitch believes this management and operational
integration fortifies the reputational links between the two
entities, increasing MB's incentive to support Mcredit, if needed.
MB also consolidates Mcredit in its group financial statements.
Shareholder Resources: Mcredit's ratings also consider MB's
adequate standalone ability to recapitalise Mcredit, if needed.
This is supported by the subsidiary's small size, as reflected by
its 3.1% and 2.8% contribution to the parent's assets and equity,
respectively, at end-September 2024 (end-2023: 2.5% and 3.1%).
Significant Minority Shareholder: Further support could come from
Mcredit's 49% shareholder, Japan-based SBI Shinsei Bank, Limited
(Shinsei Bank). Shinsei Bank has been providing technical and
financial assistance to Mcredit. However, Fitch does not ascribe
any additional uplift from Shinsei Bank's support for Mcredit,
given the minority shareholder's lower influence over the company.
Modest Standalone Profile: Mcredit's standalone credit profile does
not drive its ratings and is weaker than its support-driven IDR.
This takes into consideration the sensitivity of Vietnam's non-bank
consumer finance sector to economic cycles and reliance on
wholesale funding along with Mcredit's appetite for leverage and
evolving underwriting framework. Mitigating factors are Mcredit's
franchise as one of the country's top-three consumer finance
companies by assets and the funding flexibility accorded by
consistent funding support from shareholders.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Mcredit's Long-Term IDR is sensitive to any deterioration in MB's
standalone ability to provide extraordinary support, as indicated
by the bank's VR. Negative action on MB's VR would translate into
similar action on Mcredit's ratings.
A decline in MB's propensity to support Mcredit could also lead to
negative rating action. This could arise from an ownership dilution
to below 50%, which may result in Mcredit's rating being based
solely on its standalone strength rather than its expectation of
shareholder support. Reduced management and operational integration
with MB - most likely in combination with weaker funding support or
diminishing strategic value - may also lead to negative action.
Increased risk-taking and leverage by Mcredit may raise asset
quality, earnings and funding rollover risks. This would also
enlarge the potential financial burden for MB if support were
required, particularly if the finance company expands rapidly
relative to the parent bank. Such a scenario would weaken Mcredit's
standalone credit profile and could concurrently pressure MB's
ability to provide funding or capital support, with the potential
to trigger downward action on Mcredit's support-driven SSR and
IDR.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
The Long-Term IDR may be upgraded upon an upgrade of MB's VR or if
the company becomes a more meaningful contributor to MB's
operations and strategy. This may be evident through increased
referrals between the entities or a greater and more steady profit
contribution by Mcredit, provided that MB's ability to provide
support remains adequate relative to Mcredit's balance-sheet size.
A longer record of sustainable operations by Mcredit, combined with
a significant increase in MB's influence and control over its
subsidiary, could also lead to positive rating action. This is
assuming other factors underpinning shareholder support remain
intact.
Public Ratings with Credit Linkage to other ratings
Mcredit's Long-Term IDR is linked to MB's VR.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
MB Shinsei Finance
Limited Liability
Company LT IDR B+ Upgrade B
ST IDR B Affirmed B
Shareholder Support b+ Upgrade b
MILITARY COMMERCIAL: Fitch Affirms ‘BB’ Foreign Currency IDR
----------------------------------------------------------------
Fitch Ratings has upgraded Military Commercial Joint Stock Bank's
(MB) Viability Rating (VR) to 'bb-' from 'b+', and affirmed its
Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BB'. At
the same time, Fitch has also affirmed the bank's Government
Support Rating (GSR) at 'bb' and assigned the bank a Long-Term
Local-Currency IDR of 'BB'. The Outlook on the IDRs is Stable.
Key Rating Drivers
Improved Capitalisation Drives VR Upgrade: The upgrade of MB's VR,
which reflects the bank's standalone credit profile, is driven by
improvement in its capitalisation, as indicated by its Fitch Core
Capital (FCC) ratio of 10.5% at end-September 2024 (end-2023:
10.1%). Fitch believes that the larger capital buffer will help to
offset risks associated with its rapid loan growth, which Fitch
expects to be sustained over the coming years. Capitalisation
should be broadly at current levels over the next 12 months, as
faster loan growth is likely to be matched by better internal
capital generation.
The VR also considers MB's improving market position as one of the
largest private banks in Vietnam, with market share of about 5% of
system assets and deposits. Its growing franchise has helped the
bank defend risk-adjusted returns, despite deterioration in asset
quality in recent quarters. Fitch sees MB's state-directed takeover
of Ocean Bank as having limited financial impact on its credit
profile, although it is set to benefit from various regulatory
incentives, including a higher credit quota and a lower reserve
requirement, which are likely to fuel the bank's rapid growth.
IDR Driven by State Support: The bank's Long-Term IDRs are driven
by its GSR. The GSR is one notch higher than that of the rest of
its mid-sized rated local peers, reflecting MB's strong state
linkages, as indicated by its high indirect ownership by the
Vietnamese state (BB+/Stable) through various government-linked
companies. The rating also takes into account the state's moderate
fiscal buffers relative to the size of the banking sector that
could hamper the timeliness of support in times of stress.
Strong Economic Performance: Vietnam's economy grew by 6.8% yoy in
9M24 (2023: 5.1%) and Fitch forecasts GDP growth to be sustained at
around 6.5% annually in 2025-2026. This sets up a conducive
operating environment for banks, generating business growth
opportunities and ameliorating asset-quality risks as the domestic
real-estate market and consumer sentiment recover.
Asset Quality Metrics to Recover: MB's non-performing loan (NPL)
ratio rose to 2.2% by end-September 2024 from 1.6% at end-2023 amid
a sluggish recovery in the property sector that affected the retail
segment. Nevertheless, Fitch believes underlying asset-quality
risks are subsiding and expect activity in the real-estate sector
to continue to recover in 2025, which should support the bank's
asset quality and keep impairment levels relatively manageable.
Fitch has therefore revised the outlook on asset quality score to
positive from stable, while affirming the score at 'b+'.
Better Profitability Ahead: MB's earnings in 9M24 was affected by a
compression in margin as lending rates were reduced, in part to
support its borrowers. Fitch expects the dynamics to shift over the
next one to two years as asset-quality risks recede and as demand
for higher-yielding retail loans continue to recover. This, coupled
with higher loan growth, should result in better profitability for
the bank in 2025.
Tighter but Adequate Liquidity Profile: MB's loan/deposit ratio
rose to 98% by end-September 2024, from 91% at end-2023 due to its
high loan growth and as deposit liquidity in the system remained
tight. The ratio may rise further on persistently high credit
growth, but Fitch expects its liquidity position to remain
commensurate with the assigned score of 'bb'/stable. Customer
deposits make up about 82% of MB's funding, with low-cost current
and savings accounts comprising 32% of total deposits - one of the
highest among locally rated peers.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Any negative action on the sovereign rating is likely to be
reflected in the bank's Long-Term IDRs. The IDRs and GSR could also
be downgraded if Fitch sees material deterioration in the
sovereign's propensity to support the bank.
The bank's VR may be downgraded if Fitch sees significant
deterioration in its financial metrics, such as operating
profit/RWA falling below 2% for a prolonged period and the NPL
ratio rising above 3.5% for a sustained period. Excessive loan
growth that reduces the FCC ratio significantly below 10% for an
extended period will also likely lead to a downgrade of the VR.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
The bank's Long-Term IDRs and GSR may be upgraded if the sovereign
rating is upgraded, assuming the sovereign's propensity to support
the bank remains intact. A slower pace of balance-sheet growth that
is commensurate with prevailing risks and growth opportunities in
the broader system, coupled with the NPL ratio improving to around
1% over a sustained period and the FCC ratio rising to above 14%,
may result in a more positive assessment of the VR.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
The bank's Long-Term Foreign-Currency and Local-Currency IDRs (xgs)
exclude the assumption of government support from its underlying
ratings and are, therefore, driven by its VR. The Short-Term
Foreign-Currency and Local-Currency IDRs (xgs) are assigned in
accordance with its Long-Term IDRs (xgs) and the short-term rating
mapping outlined in Fitch's criteria.
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
Factors that could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
The Long-Term IDRs (xgs) could be downgraded if the VR is
downgraded. The Short-Term IDRs (xgs) could be downgraded if the VR
is downgraded below 'b-'.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Downgrade:
The bank's Long-Term IDRs (xgs) could be upgraded if the VR is
upgraded. The bank's Short-Term IDRs (xgs) could be upgraded if the
VR is upgraded above 'bb+'.
VR ADJUSTMENTS
The operating environment score has been assigned above the implied
score for the following adjustment: economic performance
(positive)
The asset quality score has been assigned below the implied score
for the following reason: underwriting standards and growth
(negative).
Public Ratings with Credit Linkage to other ratings
MB's Long-Term IDRs are linked to Vietnam's sovereign rating.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Military
Commercial
Joint Stock Bank LT IDR BB Affirmed BB
ST IDR B Affirmed B
LC LT IDR BB New Rating
LC ST IDR B New Rating
Viability bb- Upgrade b+
Government Support bb Affirmed bb
LT IDR (xgs) BB-(xgs)Upgrade B+(xgs)
ST IDR (xgs) B(xgs) Affirmed B(xgs)
LC LT IDR (xgs) BB-(xgs)New Rating
LC ST IDR (xgs) B (xgs) New Rating
SAIGON THUONG: Fitch Affirms 'BB-' LongTerm IDRs, Outlook Stable
----------------------------------------------------------------
Fitch Ratings has affirmed Saigon Thuong Tin Commercial Joint Stock
Bank's (Sacombank) Long-Term Foreign- and Local-Currency Issuer
Default Ratings (IDRs) at 'BB-'. The Outlook on the IDRs is Stable.
Fitch has also affirmed the bank's Viability Rating (VR) at 'b+'
and Government Support Rating (GSR) at 'bb-'.
Key Rating Drivers
Sovereign Support Drives IDRs: Sacombank's Long-Term IDRs are
underpinned by the GSR, which reflects its view of a moderate
likelihood of state support for the bank, in times of need. This
takes into consideration the Vietnamese sovereign's (BB+/Stable)
strong support stance towards the banking sector, which has high
interlinkages with the economy, offset against the state's moderate
fiscal buffers relative to the large banking system that could
hamper timeliness of support during systemic stress.
The rating also takes into consideration Sacombank's moderate
systemic importance, with market share of 4% in system deposits.
The GSR is on a par with other large privately owned peers in the
country.
Gradually Improving Standalone Profile: Sacombank's VR reflects
sustained improvements in its asset quality, profitability and
capital buffers as restructuring efforts continue to deliver
benefits. Even so, its financial metrics remain weaker than the
average of other Fitch-rated Vietnamese banks, and Fitch expects
its ability to capture market share will remain constrained by its
thin capital buffers in the near term.
Strong Economic Performance: Vietnam's economy expanded by 6.8% in
9M24 (2023: 5.1%) and Fitch forecasts GDP growth to be sustained
around 6.5% in 2025-2026. This sets up a conducive operating
environment for banks, generating business growth opportunities and
ameliorating asset-quality risks as the domestic real estate market
and consumer sentiment recover.
Higher Problem Loan Ratio: Sacombank's non-performing loan (NPL)
ratio of 2.5% at end-September 2024 was the highest among
Fitch-rated Vietnamese peers. Nevertheless, Fitch expects the
bank's asset quality metrics to improve in 2025 amid an expanding
economy and higher loan growth, leading us to revise the outlook on
the asset quality to score to 'positive' from 'stable', while
affirming the score at 'b+'.
Sacombank is the only rated bank with Vietnam Asset Management
Company (VAMC) bonds still outstanding on its balance sheet, but it
has fully provisioned for these securities, suggesting limited
impairment risks.
Sustained Profitability: Sacombank's annualised operating
profit/risk-weighted asset (RWA) ratio was broadly steady at 1.8%
in 9M24 (2023: 1.7%), as pressures on its net interest margin were
offset by stronger fee-related income. Fitch believes profitability
could improve further on a wider margin and large recoveries from
the sale of collateral associated with the VAMC bonds over the next
few years.
Improving Capitalisation: Sacombank's Fitch Core Capital (FCC)
ratio improved to 8.0% by end-September 2024, from 7.3% at
end-2023, on better internal capital generation and slower
risk-weighted asset growth. Fitch expects its capital position to
improve further over the next 12 months, assuming only share
dividends and not cash dividends are distributed and as
profitability improves. This underpins the positive outlook on the
capitalisation score of 'b'.
Higher Reliance on Pricier Deposits: Sacombank's funding and
liquidity score of 'bb'-/stable reflects a moderately weaker
funding franchise than larger Fitch-rated Vietnamese peers, due to
its higher reliance on pricier time deposits to fund assets. This
is notwithstanding its lower loan/deposit ratio (LDR) of 88% at
end-September 2024 (end-2023: 90%). Fitch expects the bank to
maintain sufficient liquidity as loan growth accelerates, helped by
easing pressure on system liquidity amid declining global interest
rates.
Largely Steady Funding Profile: Sacombank sources about 93% of
non-equity funding from customer deposits, of which retail
customers make up 83%, underlining the bank's granular deposit
base. The bank's funding and liquidity score of 'bb-'/stable also
reflects a moderately weaker funding franchise than larger
Fitch-rated Vietnamese peers, as indicated by its
higher-than-average funding costs. However, recent investments to
beef up its digital capabilities may narrow the gap over the medium
term, in its view.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
A downgrade of the sovereign rating would be likely to result in a
downgrade of the bank's GSR and Long-Term IDRs. The bank's
Short-Term IDRs could be downgraded if the Long-Term IDRs are
downgraded to below 'B-'.
A decline in the FCC ratio to less than 6%, without concrete plans
to restore it above this level, would be likely to lead to negative
rating action on the VR. The VR may also be under pressure should
Fitch see significant deterioration in asset quality, such as the
NPL ratio rising above 5% on a sustained basis.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
An upgrade in the sovereign rating may result in the upgrade of the
bank's GSR and Long-Term IDRs, provided that the state's propensity
to support the bank remains intact. The bank's Short-Term IDRs
could be upgraded if the Long-Term IDRs are upgraded to above
'BB+'.
Fitch may upgrade the bank's VR if the bank sustains its FCC ratio
at 8% or higher, coupled with improvement in its asset quality.
This assumes its other financial performance is broadly intact.
OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS
The bank's Long-Term IDRs (xgs) excludes assumption of government
support from its underlying rating, and is therefore driven by its
VR. Its Short-Term IDRs (xgs) are assigned based on the mapping
according to Fitch's Bank Rating Criteria.
OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
The Long-Term IDRs (xgs) could be downgraded if the VR is
downgraded. The Short-Term IDRs (xgs) could be downgraded if the
Long-Term IDRs (xgs) are downgraded to below 'B-'.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
The Long-Term IDRs (xgs) could be upgraded if the VR is upgraded.
The Short-Term IDRs (xgs) could be upgraded if the Long-Term IDRs
(xgs) are upgraded above 'BB+'.
VR ADJUSTMENTS
The operating environment score has been assigned above the implied
score for the following adjustment reason: economic performance
(positive)
The asset quality score has been assigned below the implied score
for the following adjustment reason: underwriting standards and
growth (negative)
Public Ratings with Credit Linkage to other ratings
Sacombank's IDRs are linked to Vietnam's sovereign rating based on
its assumption of state support.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Saigon Thuong Tin
Commercial Joint
Stock Bank LT IDR BB- Affirmed BB-
ST IDR B Affirmed B
LC LT IDR BB- Affirmed BB-
LC ST IDR B Affirmed B
Viability b+ Affirmed b+
Government Support bb- Affirmed bb-
LT IDR (xgs) B+(xgs)Affirmed B+(xgs)
ST IDR (xgs) B(xgs) Affirmed B(xgs)
LC LT IDR (xgs) B+(xgs)Affirmed B+(xgs)
LC ST IDR (xgs) B(xgs) Affirmed B(xgs)
STANDARD CHARTERED: Fitch Affirms BB+ Foreign Currency IDR
----------------------------------------------------------
Fitch Ratings has affirmed Standard Chartered Bank (Vietnam)
Limited's (SCBVL) Long-Term Foreign-Currency Issuer Default Rating
(IDR) at 'BB+' and Long-Term Local-Currency IDR at 'BBB'. The
Outlook is Stable. At the same time, Fitch has affirmed the
Short-Term Foreign-Currency Rating at 'B', Short-Term
Local-Currency IDR at 'F2' and the Shareholder Support Rating (SSR)
at 'bb+'.
Key Rating Drivers
Ratings Driven by Parent Support: SCBVL's Long-Term IDRs are driven
by its expectation of support from its parent, Standard Chartered
Bank (Singapore) Limited (SCBS, A+/Stable/a), if necessary. The
ratings take into account SCBVL's strategic importance to the group
as well as its shared branding and high operational linkages with
SCBS. Fitch believes that SCBS's propensity to support is high, but
its ability to support SCBVL is constrained by its assessment of
transfer and convertibility risks in Vietnam, as indicated by the
Country Ceiling of 'BB+'.
Fitch has not assigned a Viability Rating (VR) to SCBVL because the
entity is a small and closely linked part of the group, and this
renders a standalone assessment less meaningful. Fitch uses SCBS's
VR instead of its IDR as the anchor rating for shareholder support,
as it is unclear whether the qualifying junior debt buffers being
built by SCBS will be pre-placed or effectively available to
support SCBVL's senior creditors.
Growing Contribution to Group: SCBVL contributed about 6% of SCBS's
operating income in 2023, and this proportion is likely to increase
over time due to the bank's strong business growth prospects in
Vietnam. The subsidiary also benefits significantly from its
parent's strong global franchise, allowing it to serve large
multinational clients as well as high-income retail clients in
Vietnam, despite its modest market share of system assets and
deposits.
Lower Local-Currency Repayment Risks: SCBVL's Long-Term
Local-Currency IDR is two notches above Vietnam's sovereign rating
(BB+/Stable), reflecting its belief that there is a lower
likelihood of the sovereign restricting parental support for
SCBVL's local-currency obligations relative to foreign-currency
ones, even if the sovereign is in distress.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
The SSR is sensitive to movements in Vietnam's Country Ceiling,
sovereign rating and sovereign rating Outlook. Any downward
revision of the sovereign is likely to lead to similar revisions in
the SSR and Long-Term IDRs and Outlook for SCBVL. The bank's
Short-Term Local-Currency IDR will be downgraded if its Long-Term
Local-Currency IDR is downgraded.
The parent SCBS's VR is five notches above Vietnam's Country
Ceiling. There will have to be substantial revision in its
assessment of SCBS's ability or propensity to support SCBVL before
the subsidiary's support-driven rating is affected, assuming no
changes to Vietnam's Country Ceiling, sovereign rating and
sovereign rating Outlook - a scenario that Fitch thinks is unlikely
to occur in the near term.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
The bank's ratings are constrained by Vietnam's sovereign rating
and Country Ceiling. Further upward revision in the sovereign
rating and Country Ceiling would be likely to lead to a
corresponding revision in the bank's SSR and Long-Term
Foreign-Currency IDR, assuming the parent's ability and propensity
to support the bank remain intact. The Long-Term Local-Currency IDR
is two notches above the Country Ceiling, and whether a higher
Country Ceiling leads to an upgrade would be subject to further
review.
The Short-Term IDRs will be upgraded if the Long-Term IDRs are
upgraded.
Public Ratings with Credit Linkage to other ratings
SCBVL's ratings are linked to Vietnam's sovereign rating and SCBS's
ratings.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless
otherwise disclosed in this section. A score of '3' means ESG
issues are credit-neutral or have only a minimal credit impact on
the entity, either due to their nature or the way in which they are
being managed by the entity. Fitch's ESG Relevance Scores are not
inputs in the rating process; they are an observation on the
relevance and materiality of ESG factors in the rating decision.
Entity/Debt Rating Prior
----------- ------ -----
Standard Chartered
Bank (Vietnam) Limited LT IDR BB+ Affirmed BB+
ST IDR B Affirmed B
LC LT IDR BBB Affirmed BBB
LC ST IDR F2 Affirmed F2
Shareholder Support bb+ Affirmed bb+
*********
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