/raid1/www/Hosts/bankrupt/TCRAP_Public/241209.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 9, 2024, Vol. 27, No. 246
Headlines
A U S T R A L I A
ANGLE ASSET 2024-2: Moody's Gives (P)B3 Rating to AUD9.10MM F Notes
COPPOLECCHIA WELLNESS: First Creditors' Meeting Set for Dec. 12
GOLDIN AUSTRALIA: First Creditors' Meeting Set for Dec. 12
IC TRUST 2024-1: Moody's Assigns B2 Rating to AUD3.5MM Cl. D Notes
JUNKYARD ARTIST: Goes Under, Leaving Clients Out of Pocket
KNIGHTS QUALITY: First Creditors' Meeting Set for Dec. 12
NUFARM LIMITED: Fitch Alters Outlook on BB LongTerm IDR to Negative
PACIFIC NATIONAL: Fitch Assigns BB Rating on Jr. Subordinated Debt
PANORAMA AUTO 2024-4P: Fitch Assigns B(EXP) Rating on Cl. F Notes
PEPPER RESIDENTIAL 39: Moody's Ups Rating on Class E Notes to Ba1
PHIL TERRY: First Creditors' Meeting Set for Dec. 11
PROFINISH SERVICES: First Creditors' Meeting Set for Dec. 12
RESIMAC BASTILLE 2022-2NC: Moody's Ups Cl. F Notes Rating to Ba2
ROSSLYN HILL: First Creditors' Meeting Set for Dec. 11
SAPPHIRE XXXI 2024-3: S&P Assigns Prelim. B+ Rating on F Notes
WISE INVESTMENT: ASIC Bans Sole Director for 7 Years
H O N G K O N G
CHINA AIRCRAFT: Fitch Affirms & Withdraws 'BB+' LongTerm IDR
I N D I A
AGROW FOODS: CARE Keeps D Debt Rating in Not Cooperating Category
CA MAGNUM: Moody's Affirms 'B1' CFR, Outlook Remains Negative
DHANRAJ COTTON: CARE Keeps B- Debt Rating in Not Cooperating
EAST WEST PHARMA: CARE Lowers Rating on INR10cr LT Loan to B-
ESSEL GROUP: Acre ARC Wins Bid to Take Over Groups' Bad Loans
INMARK RETAIL: CARE Keeps D Debt Rating in Not Cooperating
JAIPRAKASH ASSOCIATES: NCLAT Rejects Bid Challenging Insolvency
KABRA TRANSPORT: CARE Keeps B- Debt Rating in Not Cooperating
KALPAK INDUSTRIAL: CRISIL Keeps D Debt Ratings in Not Cooperating
LANCO KONDAPALLI: CRISIL Keeps D Debt Ratings in Not Cooperating
MACHHI RAM: CRISIL Keeps D Debt Ratings in Not Cooperating
MALWA FRESH: CARE Keeps B- Debt Rating in Not Cooperating Category
MANGLAM AGROTECH: CARE Lowers Rating on INR29.52cr LT Loan to B-
METENERE LIMITED: CRISIL Keeps D Debt Ratings in Not Cooperating
PRIMUSS PIPES: CRISIL Keeps D Debt Ratings in Not Cooperating
RIME RICH: CRISIL Moves D Debt Ratings to Not Cooperating
SHIV COTTON: CARE Keeps C Debt Rating in Not Cooperating Category
SHREEDHAR MILK: CRISIL Keeps D Debt Rating in Not Cooperating
SHRINATH COTTON: CARE Keeps D Debt Rating in Not Cooperating
SHUKRA JEWELLERY: CRISIL Keeps D Debt Ratings in Not Cooperating
SIDHANATH SUGAR: CRISIL Keeps D Debt Ratings in Not Cooperating
SIKKIM FERRO: CRISIL Keeps D Debt Ratings in Not Cooperating
SIWAL INFRACON: CARE Keeps C Debt Rating in Not Cooperating
SUBHASH POULTRY: CARE Keeps B- Debt Rating in Not Cooperating
TRISONS IMPEX: CRISIL Keeps D Debt Ratings in Not Cooperating
VANI ORGANICS: CARE Keeps C Debt Rating in Not Cooperating
VIVIN DRUGS: CRISIL Lowers Long/Short Term Debt Ratings to D
WHITEFIELDS APPAREL: CARE Keeps D Debt Ratings in Not Cooperating
J A P A N
RAKUTEN GROUP: S&P Rates New Perpetual Subordinated Bonds 'B'
SOFTBANK GROUP: Moody's Alters Outlook on 'Ba3' CFR to Positive
M A L A Y S I A
HO HUP: Subsidiary Golden Wave Placed Under Receivership
MMAG HOLDINGS: Proposes Share Capital Reduction to Reduce Losses
N E W Z E A L A N D
AVAILABILITY.CO.NZ: Creditors' Proofs of Debt Due on Dec. 28
FRANK LEATHEM: Creditors' Proofs of Debt Due on Jan. 27
INNOVATIVE ROOFING: Creditors' Proofs of Debt Due on Jan. 2
OAKMONT HOMES: Court to Hear Wind-Up Petition on Feb. 21
TRG NATURAL: Court to Hear Wind-Up Petition on Dec. 18
P A K I S T A N
PAKISTAN INT'L AIRPORT: To Resume Flights to Europe on Jan. 10
P H I L I P P I N E S
MJC INVESTMENTS: To Convert PHP2.4B in Deposits to Fix Deficit
S I N G A P O R E
BLOSSOMSFOOD PTE: Court to Hear Wind-Up Petition on Dec. 20
DNS ASIA: Creditors' Proofs of Debt Due on Jan. 6
FONBELL SOLUTION: Court to Hear Wind-Up Petition on Dec. 20
IDEAL DESIGN: Court Enters Wind-Up Order
OSTARA CHINA: Creditors' Proofs of Debt Due on Jan. 6
S R I L A N K A
SRI LANKA: Moody's Puts 'Ca' Issuer Rating on Review for Upgrade
- - - - -
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A U S T R A L I A
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ANGLE ASSET 2024-2: Moody's Gives (P)B3 Rating to AUD9.10MM F Notes
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Moody's Ratings has assigned the following provisional ratings to
ABS notes to be issued by Perpetual Corporate Trust Limited as
trustee of Angle Asset Finance - Radian Trust 2024-2.
Issuer: Perpetual Corporate Trust Limited as trustee of Angle Asset
Finance - Radian Trust 2024-2
AUD256.55 million Class A Notes, Assigned (P)Aaa (sf)
AUD30.80 million Class B Notes, Assigned (P)Aa2 (sf)
AUD16.45 million Class C Notes, Assigned (P)A2 (sf)
AUD8.75 million Class D Notes, Assigned (P)Baa2 (sf)
AUD16.80 million Class E Notes, Assigned (P)Ba2 (sf)
AUD9.10 million Class F Notes, Assigned (P)B3 (sf)
The AUD5.77 million Class G1 Notes and AUD5.78 million Class G2
Notes (together, the Class G Notes) are not rated by us.
Angle Asset Finance - Radian Trust 2024-2 is a securitisation of
auto and equipment loans and operating leases originated by A.C.N
603 303 126 Pty Ltd trading as Angle Asset Finance (unrated, Angle
Asset Finance). The obligors in the pool are mainly
small-to-medium-sized enterprises (SME), and also include
corporates and government entities, all domiciled in Australia. The
underlying assets relating to the receivables include, among
others, cars (up to 4.5t) (53.4%), other wheeled assets (25.7%),
trucks (15.7%) and photocopier and printers (4.4%).
Angle Asset Finance originated about 99.7% of the receivables in
this portfolio, with around 91.8% and 7.8% originated via broker
and vendor channels, respectively. Capital Finance Australia
Limited (CFAL, unrated), a wholly owned subsidiary of Westpac
Banking Corporation (Westpac, Aa2/P-1/Aa1(cr)/P-1(cr)), originated
the residual 0.3% of the receivables in this portfolio through its
then vendor finance business. All receivables are serviced by
Garrison Lending Operations Pty Limited (unrated), a wholly owned
subsidiary of Angle Asset Finance.
Angle Asset Finance is a non-bank lender providing asset financing
to SMEs, corporates and government entities via brokers and vendor
relationships. Angle Asset Finance has been in operation since
October 2019, and started originating auto and equipment loans to
SMEs via brokers in significant volumes from October 2020. As of
October 31, 2024, its assets under management totaled around
AUD1.76 billion. Angle Asset Finance is privately owned by an
affiliate company of Cerberus Capital Management, L.P. as a
majority shareholder and Deutsche Bank AG, Sydney Branch.
RATINGS RATIONALE
The provisional ratings take into account, among other factors, (1)
Moody's evaluation of the underlying receivables and their expected
performance; (2) evaluation of the capital structure and credit
enhancement provided to the rated notes; (3) availability of excess
spread over the transaction's life; (4) the liquidity facility in
the amount of 1.5% of all notes other than the Class G Notes; (5)
the legal structure; (6) experience of Garrison Lending Operations
Pty Limited as servicer; and (7) the presence of Perpetual
Corporate Trust Limited as the back-up servicer.
According to Moody's analysis, the transaction benefits from a high
level of excess spread. The portfolio yield of 10.2% - relative to
the transaction expenses - results in a high level of excess spread
available to cover losses arising from the portfolio.
The key weaknesses in the transaction are the limited availability
of historical data and higher-than-expected variability in
performance to date. Firstly, Angle Asset Finance started its
originations via brokers in January 2020, with significant volumes
only beginning in October 2020. Its originations via vendors
started in August 2021. Secondly, receivables originated between Q3
2022 to Q3 2023 are showing higher early cumulative defaults than
prior origination vintages. As such, the performance of the
portfolio could be subject to greater variability in the future
than the observed performance to date indicates. Moody's have taken
this into account in Moody's asset analysis.
TRANSACTION STRUCTURE AND POOL CHARACTERISTICS
Key transactional features are as follows:
-- The notes will be repaid on a sequential basis initially. On
and after the payment date occurring twelve months after the deal
closing date, all notes, other than the Class G Notes, will receive
their pro-rata share of principal, provided step-down conditions
are satisfied. These include, among others, no unreimbursed
charge-offs and the payment date occurring prior to the call option
date. If step-down conditions are no longer met, the repayment of
principal will revert to sequential. The call option date will
occur on the earlier of the payment date in December 2027 and the
invested amount of the notes falling below 10% of the initial
invested amount of the notes.
-- Citigroup Global Markets Limited (Citi,
A1/P-1/Aa3(cr)/P-1(cr)), Westpac Banking Corporation (Westpac,
Aa2/P-1/Aa1(cr)/P-1(cr)), and National Australia Bank Limited
(Aa2/P-1/Aa1(cr)/P-1(cr)), will provide fixed rate swaps for around
33.6%, 33.4,% and 33.0% of the total swap notional, respectively,
as of closing date. The swaps will hedge the interest rate mismatch
between the assets bearing a fixed rate of interest, and floating
rate liabilities. As at closing, the total swap notional will
correspond to all notes, other than the Class G2 Notes. The total
swap notional will follow a schedule based on the amortisation of
the assets assuming a certain prepayment rate.
Key pool features are as follows:
-- The pool has a weighted average seasoning of 10.0 months.
-- The proportion of loans with a balloon payment is 34.6%.
-- Interest rates in the portfolio range from 4.0% to 24.0%, with
a weighted average interest rate of 10.2%.
-- Loans underwritten on the basis of 'no financials' verification
represent around 92.5% of the pool.
MAIN MODEL ASSUMPTIONS
Moody's portfolio credit enhancement ("PCE") is 29%. Moody's
expected default rate for this transaction is 6.4% and expected
recovery is 20%, resulting in an expected loss of around 5.1%.
The expected loss captures Moody's expectations of performance
considering the current economic outlook, while the PCE captures
the loss Moody's expect the portfolio to suffer in the event of a
severe recession scenario. The expected default rate, recovery and
PCE are parameters used by us to calibrate its lognormal portfolio
loss distribution curve and to associate a probability with each
potential future loss scenario in Moody's cash flow model.
Moody's have estimated an expected default rate and PCE for this
deal on the basis of:
-- Cumulative default rates observed to date, and in particular
receivables originated between Q3 2022 to Q3 2023 are showing
higher early cumulative defaults than prior origination vintages.
-- Benchmarking with other SME auto and equipment receivable
portfolios in the market, in view of the short performance history
of receivables originated by Angle Asset Finance.
Moody's asset assumptions also reflect qualitative analysis
including portfolio characteristics, the limited operational track
record of Angle Asset Finance as an originator and servicer and the
current economic environment in Australia.
Methodology Underlying the Rating Action
The principal methodology used in these ratings was "Equipment
Lease and Loan Securitizations" published in July 2024.
Factors that would lead to an upgrade or downgrade of the ratings:
Factors that could lead to an upgrade of the notes include a rapid
build-up of credit enhancement due to sequential amortization or a
better-than-expected collateral performance. The Australian economy
and job market are primary drivers of performance.
Factors that could lead to a downgrade of the notes is a
worse-than-expected collateral performance, poor servicing, error
on the part of transaction parties, a deterioration in the credit
quality of transaction counterparties, a lack of transactional
governance, or fraud.
COPPOLECCHIA WELLNESS: First Creditors' Meeting Set for Dec. 12
---------------------------------------------------------------
A first meeting of the creditors in the proceedings of Coppolecchia
Wellness Group (No. 6) Pty Ltd (Trading name: City Cave Keperra)
will be held on Dec. 12, 2024 at 1:00 p.m. via teleconference
facilities.
Andrew Quinn of Mackay Goodwin was appointed as administrator of
the company on Dec. 2, 2024.
GOLDIN AUSTRALIA: First Creditors' Meeting Set for Dec. 12
----------------------------------------------------------
A first meeting of the creditors in the proceedings of Goldin
Australia Pty Limited ATF Goldin Australia Equine Trust (Trading
name: Goldin Farms) and Goldin Wines Australia Pty Limited (Trading
name: Tarrawatta) will be held on Dec. 12, 2024 at 11:00 a.m. and
11:30 a.m., respectively, at the offices WLP Restructuring, Suite
19.02, Level 19, 1 Castlereagh Street, in Sydney, NSW.
Alan Walker and Glenn Livingstone of WLP Restructuring were
appointed as administrators of the company on Dec. 2, 2024.
IC TRUST 2024-1: Moody's Assigns B2 Rating to AUD3.5MM Cl. D Notes
------------------------------------------------------------------
Moody's Ratings has assigned definitive ratings to notes to be
issued by Perpetual Corporate Trust Limited, as trustee of IC Trust
Series 2024-1.
Issuer: Perpetual Corporate Trust Limited as trustee of IC Trust
Series 2024-1
AUD69.3 million Class A Notes, Assigned A1 (sf)
AUD4.6 million Class B Notes, Assigned Baa2 (sf)
AUD9.4 million Class C Notes, Assigned Ba2 (sf)
AUD3.5 million Class D Notes, Assigned B2 (sf)
The AUD3.2 million Class E Notes, AUD4.0 million Class F Notes, and
AUD6.0 million Class G Notes are not rated by us.
The transaction is a cash securitisation of non-conforming consumer
and commercial auto loans extended to borrowers in Australia. The
loans were originated by Fin One Pty Ltd (Fin One, unrated) and
Finance One Commercial Pty Ltd (Finance One Commercial, unrated),
which are both wholly owned subsidiaries of Investors Central
Limited (unrated) and are collectively referred to as Finance One.
The loans are serviced by Fin One.
Fin One, a privately owned non-bank lender, was established in 2010
with a focus of providing auto loans to non-conforming consumer
borrowers in the Australian market. In 2016, the lender expanded
into financing of commercial auto loans.
RATINGS RATIONALE
The definitive ratings take into account, among other factors:
-- The evaluation of the underlying receivables and their expected
performance;
-- The evaluation of the capital structure and credit enhancement
provided to the notes, which comprise availability of excess spread
over the life of the transaction, the liquidity reserve in the
amount of 1.5% of stated balance of the notes - that is
AUD1,500,339 funded at closing, and the legal structure.
-- The experience of Fin One as servicer and the availability of a
back-up servicer.
Key transactional features are as follows:
-- While the assets in the pool are fixed rate, the rated notes
bear a floating rate of interest – bank bill swap rate (BBSW)
plus the respective fixed note margins. There is no hedging in this
transaction, which represents a material risk in a rising interest
rate environment. Moody's have taken this into account in Moody's
analysis by incorporating BBSW increases over the life of the
transaction.
-- Once step-down conditions are satisfied, all rated notes, will
receive their pro-rata share of principal. Step-down conditions
include, among others, that the subordination to the Class A notes
is at least 1.5 times the initial level of subordination, and that
there are no unreimbursed charge-offs.
-- A yield reserve will be available to cover interest payment
shortfalls on the required payments and any losses not covered by
the excess spread. The reserve is not funded at closing and will
build up from excess spread up to an amount of 1.5% of the initial
invested amount of the notes, that is AUD1,500,339. If the notes
are not redeemed on the call date, all excess available income will
be trapped in the yield reserve.
-- Perpetual Corporate Trust Limited is the back-up servicer. If
Fin One is terminated as servicer, Perpetual will take over the
servicing role in accordance with the standby servicing deed and
its back-up servicing plan.
According to Moody's analysis, the transaction benefits from credit
strengths such as the high level of excess spread that is available
to cover losses from defaulted receivables and the availability of
a yield reserve.
At the same time, Moody's note that the transaction features credit
weaknesses such as high proportion of borrowers with adverse credit
history (43.0%) - of which 19.3% are discharged bankrupts and 23.7%
have prior defaults and/or judgements, limited performance data for
commercial loans, and exposure to interest rate risk.
In addition, Moody's note that Fin One is a specialist servicer of
non-conforming auto loans. In an event of servicer transfer, there
is a risk of higher level of defaults in the portfolio, if the
substitute servicer does not have the same specialised approach to
servicing as Fin One. Furthermore, Moody's note Fin One's
relatively limited securitisation experience (the lender started
securitising only in 2021) and its concentrated ownership
structure.
Key model and portfolio assumptions:
Moody's portfolio credit enhancement ("PCE") – representing the
loss that Moody's expect the portfolio to suffer in the event of a
severe recession scenario – is 50.0%. Moody's mean expected
default rate and recovery rate assumption for this transaction are
17.0% and 10.0%, respectively. Moody's assumed default rate is
stressed compared to the actual historical levels of 12.2% for
consumer loans and 15.2% for commercial loans. Similarly, Moody's
assumed recovery rate is stressed compared to the historical level
of 16.4%.
The assumed default rate and PCE are higher than that for other
Australian auto ABS, reflecting the non-conforming nature of the
securitised portfolio. The lower-than-average assumed recovery rate
reflects Finance One's historical experience.
Key pool characteristics are as follows:
-- 43.0% of the loans are to obligors with prior adverse credit
history (19.3% discharged bankrupts and 23.7% prior defaults and/or
judgements);
-- Weighted average Equifax credit score for the pool is 543.
Around 52.7% of loans in the pool are to borrowers with Equifax
credit score below 500;
-- Around 47.7% of the pool is composed of consumer loans and
52.3% of the pool is composed of commercial loans;
-- Interest rates in the portfolio range from 12.0% to 26.5%, with
a weighted average interest rate of 19.9%;
-- Around 93.3% of the loans are secured by used vehicles;
--The weighted average seasoning of the portfolio is 15.6 months,
while the weighted average remaining term is 46.6 months.
Methodology Underlying the Rating Action
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:
Up
Levels of credit protection that are greater than necessary to
protect investors against current expectations of loss could lead
to an upgrade of the ratings. Moody's current expectations of loss
could be better than its original expectations because of fewer
defaults by underlying obligors. The Australian job market is a
primary driver of performance.
Down
Levels of credit protection that are insufficient to protect
investors against current expectations of loss could lead to a
downgrade of the ratings. Moody's current expectations of loss
could be worse than its original expectations because of more
defaults by underlying obligors. The Australian job market is a
primary driver of performance. Other reasons for worse performance
than Moody's expect include poor servicing, error on the part of
transaction parties, a deterioration in credit quality of
transaction counterparties, lack of transactional governance and
fraud.
JUNKYARD ARTIST: Goes Under, Leaving Clients Out of Pocket
----------------------------------------------------------
Kelly Burke at Guardian Australia reports that the agency
representing some of Australia's leading comedians has gone under,
leading some clients to complain they are owed substantial sums.
Liquidators for the talent management company Junkyard Artist
Management and the production company West Street Sports were
appointed on Dec. 2, Guardian Australia discloses. Junkyard managed
some of the country's top comedians, including the 2022 Edinburgh
Comedy Festival winner Sam Campbell and Fisk actor Aaron Chen.
Its founder and director, Craig Ivanoff, appears to have gone to
ground.
"My [management company] went bankrupt out of absolutely nowhere,"
standup comedian Lewis Garnham posted on Instagram, Guardian
Australia relays. "He hasn't even spoken to me yet."
In September, a project by Mr. Ivanoff's West Street Sports was one
of three recipients of a AUD400,000 Fresh Blood grant, jointly
funded by Screen Australia and the ABC. The grant was to develop a
pilot for a new comedy-drama, titled Going Under, being written by
two Australian comedians with Mr. Ivanoff slated to co-produce.
A spokesperson for the ABC said the broadcaster was "aware of the
situation" and was "in conversations with the relevant parties".
Reuters says a Screen Australia statement said it too was aware
that the Fresh Blood recipient's company had been placed under
external administration.
"We are in discussions with the affected parties to determine next
steps, in accordance with our internal processes," the statement
said.
On Dec. 2, Andrew Spring, a partner with the Sydney insolvency
specialists Jirsch Sutherland Insolvency Solutions, was appointed
as liquidator to both companies, Guardian Australia discloses.
"It's still early days in the investigation into the reasons for
the company's failure and the true creditors' position," Mr. Spring
said in a statement in relation to West Street Sports. He said it
was yet to be determined how many creditors the company had and how
much those creditors were owed.
"[We] are waiting to get access to the company's files/records and
for the director to provide the creditors' list. One of the
liquidator's key focuses is on identifying and securing any
assets."
Mr. Spring said he did not "have transparency regarding the Fresh
Blood grants and the progress of the pilot", but hoped to have
clearer insights next week.
By law, the liquidator must notify creditors within 10 business
days of a company going into receivership.
According to Guardian Australia, the stand-up comedian Andrew
Hamilton, known for his show Jokes About the Time I Went to Prison,
posted on social media that he had been hit "pretty hard" by
Junkyard's collapse.
"I lost all the money from my national tour," Mr. Hamilton posted
on Instagram, advertising a new fundraising show titled Jokes About
the Time I lost My Money above crossed-out dates of the 12-city
tour of Australia he undertook in August.
"At the risk of going against popular sentiment, I am not going to
be too hard on my former management. They spread themselves too
thin trying to support their people, and stuffed up the numbers.
Never attribute to malice what can be reasonably attributed to
stupidity."
KNIGHTS QUALITY: First Creditors' Meeting Set for Dec. 12
---------------------------------------------------------
A first meeting of the creditors in the proceedings of Knights
Quality Plumbing Pty. Limited will be held on Dec. 12, 2024 at
11:00 a.m. at offices of Rodgers Reidy, Level 12, 210 Clarence
Street, in Sydney, NSW.
Andrew James Barnden of Rodgers Reidy was appointed as
administrators of the company on Dec. 2, 2024.
NUFARM LIMITED: Fitch Alters Outlook on BB LongTerm IDR to Negative
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Fitch Ratings has revised the Outlook on Nufarm Limited's Long-Term
Issuer Default Rating (IDR) to Negative from Stable, while
affirming the IDR at 'BB'. The agency has also affirmed the senior
unsecured notes issued by Nufarm's wholly owned subsidiaries,
Nufarm Australia Limited and Nufarm Americas Inc., under a dual
tranche structure at 'BB'. The notes are rated at the same level as
Nufarm's IDR because they represent its direct, unconditional,
unsecured and unsubordinated obligations.
The Negative Outlook reflects the risk that a prolonged oversupply
from China and an escalation of US-China trade tensions could delay
Nufarm's deleveraging and weaken its credit profile. For now, Fitch
expects Nufarm's EBITDA leverage to improve to 4.0x in the
financial year ending September 2025 (FY25) from 5.5x in FY24, and
drop thereafter to below 3.5x, a level Fitch thinks consistent with
its rating. Its leverage forecast is based on a gradual recovery in
product prices and improvement in margins.
The rating reflects the company's top 10 position in the global
market for agricultural chemicals, which is balanced by its
reliance on external suppliers for most of its active ingredients
and a product portfolio skewed towards herbicides.
Key Rating Drivers
Industry Challenges; Improved Working Capital: Nufarm's FY24
Fitch-adjusted EBITDA fell by 43% yoy as revenue declined by 4% and
margins narrowed by 4pp. Significant channel destocking with
customers holding less inventory than usual and greater competition
reduced demand and pricing across the industry. This drove up
EBITDA leverage to 5.5x (FY23: 3.5x), despite a 30% reduction in
net working capital by FYE24.
The improved free cash flow was used to repay debt, reducing net
debt by around 20%. Fitch expects the company to remain focused on
reducing costs and net working capital in the near term as it
navigates the industry challenges.
Gradual Recovery Likely, Strength Uncertain: Fitch anticipates
demand to rebound as channel destocking in crop-protection subsides
from early 2025, driving price recovery and improvement in the
Fitch-adjusted EBITDA and margins to around AUD260 million (FY24:
AUD187 million) and about 7% (FY24: 5.6%), respectively, in FY25.
This should reduce EBITDA leverage to 4.0x and maintain it below
3.5x from FY26, assuming no major debt-funded acquisitions.
However, the extent of the recovery is uncertain, and depends on
supply rationalisation in China due to its producers' weak
profitability.
Australia's Robust Demand, Industry Fundamentals: Nufarm has a 20%
revenue exposure to Australia and Fitch expects favourable weather
conditions and attractive grain prices to keep crop-protection
demand strong in 2025, which would support earnings, as it did in
FY24. The global crop-protection industry has better profitability
and lower price volatility than commodity chemicals, but remains
vulnerable to extreme weather events. Still, the crop-protection
industry has high barriers to entry, as it is highly regulated and
product registrations take several years.
Limited Vertical Integration: Nufarm is heavily reliant on external
purchases, with the majority of its raw material requirements met
by manufacturers in China. Under the current operating environment
of low prices, the lack of vertical integration protects Nufarm's
margins to some extent compared with that of peers. Fitch expects
Nufarm to remain exposed to volatilities in raw material
availability and costs, which will affect its margins as operating
conditions normalise over the medium term.
Strong Market Share: Nufarm has a top-10 market position globally
in terms of overall crop-protection and seed product sales. It
ranks second in Australia, is the leader in New Zealand, and has
strong positions in segments such as European cereal herbicides,
turf and ornamental crop-protection in the US, and phenoxy
herbicides globally. Nufarm also benefits from the sale of products
sourced from Japan's Sumitomo Chemical, the eighth-largest industry
player, under a strategic alliance.
Scale Differentiator: Nufarm's scale remains small compared with
the industry's leading players, with revenue less than half of
those in the top five positions, although it is well-positioned
within the 'bb' category. The ability to provide a comprehensive
set of product solutions to farmers with the help of an extensive
portfolio is a key competitive advantage. Fitch believes Nufarm is
likely to invest in expanding its scale and product range in the
next few years through organic as well as inorganic means.
Moderate Product and Geographical Diversification: Herbicides
contribute around two-thirds of Nufarm's revenue, weakening the
diversification of its portfolio, and dry weather has a significant
impact on demand. Nufarm derived 43% of its crop-protection revenue
from North America in FY24 (FY23: 41%), 29% from APAC (FY23: 31%)
and 28% from Europe (FY23: 28%). However, its geographical
diversification is limited by a lack of presence in Latin America,
one of the largest crop chemicals markets, and significant revenue
exposure to the relatively small Australian market.
Derivation Summary
Nufarm is rated at the same level as crop-protection chemical
industry peers UPL Corporation Limited (BB/Negative), whose rating
is based on the consolidated profile of parent UPL Limited. Nufarm
has a weaker business profile but stronger financial metrics than
UPL Corporation.
UPL Corporation is the largest company in the post-patent segment
of the crop-protection market, with an EBITDA of more than 4x that
of Nufarm and significantly wider EBITDA margins. The wider margins
reflect benefits from better vertical integration, underscored by
UPL Corporation's large manufacturing operations in India that
benefit from low operating costs. UPL Corporation also has better
geographical diversification, with operations in main markets
including in Latin America. Its product portfolio is more balanced,
with no category constituting more than 35% of the total. However,
UPL Corporation's estimated leverage in FY24 and FY25 is
significantly higher and its interest coverage is weaker than its
expectations for Nufarm.
Nufarm is rated one notch below the 'bb+' Standalone Credit Profile
(SCP) of Syngenta AG (BBB/Stable). Syngenta's rating incorporates a
two-notch uplift from its linkage with indirect parents China
National Chemical Corporation Limited (A/Negative) and, ultimately,
Sinochem Holdings Corporation Ltd. The rating difference between
Nufarm and Syngenta is due mainly to Syngenta's stronger business
profile.
Syngenta is an innovator and the global leader in the
crop-protection chemicals market in terms of sales, with a large
portfolio of patented crop-protection chemicals. It has wider
EBITDA margins and revenue of more than 5x that of Nufarm. Syngenta
also has a better business profile than Nufarm, supported by its
significantly larger scale of operations, healthy product and
geographical diversification, and market leadership across several
key segments.
Nufarm is rated one notch below soda ash producer Tata Chemicals
Limited (TCL, BB+/Stable), among broader chemical industry peers.
TCL and Nufarm have similar leverage, but TCL has wider EBITDA
margins, which have helped it to weather rising energy costs. TCL
has a strong market position as the world's third-largest soda ash
producer, with a cost advantage compared with peers. TCL, like
Nufarm, is constrained by its small scale relative to global peers
and limited product diversification, exposing it to risks related
to the commodity nature of soda ash than peers that are larger or
sell multiple products.
Nufarm is rated two to three notches below other fertiliser
producers, including OCI N.V. (BBB-/Rating Watch Negative), The
Mosaic Company (BBB/Stable), ICL Group Ltd. (BBB-/Stable), FMC
Corporation (BBB-/Stable) and CF Industries, Inc. (BBB/Stable). The
rating difference between these peers and Nufarm is due to their
stronger business profiles in terms of size, scale, level of
diversification and cost positions.
Key Assumptions
Fitch's Key Assumptions Within the Rating Case for the Issuer:
- Revenue CAGR of 6% between FY25 and FY28, driven by price
recovery and volume growth;
- Average EBITDA margin (after adding capitalised R&D costs and
adjusting for leases) gradually improving from around 6% in FY24 to
10% by FY28;
- Average annual capex (after adjusting for capitalised R&D costs)
of around AUD180 million between FY25 and FY28, funded mainly by
operations;
- Total spending on acquisitions of around AUD200 million until
FY28, which is likely to raise its leverage.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
Fitch may revise the Outlook to Stable if performance is better
than the sensitivities for negative rating action.
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- EBITDA leverage above 3.5x on a sustained basis;
- Sustained negative free cash flow;
- Evidence of weakening competitiveness and business profile.
Liquidity and Debt Structure
Fitch estimates Nufarm's readily available cash at around AUD300
million as of end-September 2024, lower than the reported cash and
cash equivalents of AUD464 million after adjustment for working
capital seasonality. By comparison, Nufarm's short-term debt
(adjusted for supplier financing) was lower at around
AUD120million. Long-term debt comprised USD350 million of senior
unsecured notes and the drawdown of loans from the asset-based
lending (ABL) credit facility.
Fitch expects Nufarm to use the substantial liquidity and cash to
fund capex and working-capital requirements, repay a portion of
debt, and seek growth opportunities from bolt-on acquisitions.
Nufarm's capital structure includes an ABL facility secured against
inventories and trade receivables located in Australia, the US and
Canada and supply chain financing. The outstanding amount under the
ABL facility is reported as secured debt. The supply chain
financing is an off-balance-sheet arrangement, but Fitch treats a
portion of the amount outstanding as secured debt to adjust for
reverse factoring under its criteria. However, Fitch does not
believe that the level of this prior-ranking debt will impair
Nufarm's ability to pay senior unsecured creditors.
Issuer Profile
Nufarm is among the world's 10 largest crop-protection chemical
companies, operating mainly in the post-patent segment. It also has
a small but fast-growing global commercial seeds business.
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
----------- ------ -----
Nufarm Limited LT IDR BB Affirmed BB
Nufarm Australia
Limited
senior unsecured LT BB Affirmed BB
Nufarm Americas Inc.
senior unsecured LT BB Affirmed BB
PACIFIC NATIONAL: Fitch Assigns BB Rating on Jr. Subordinated Debt
------------------------------------------------------------------
Fitch Ratings has assigned Pacific National Finance Pty Ltd's
(senior unsecured rating: BBB-) proposed callable deeply
subordinated capital securities a rating of 'BB'. The proposed
securities qualify for 50% equity credit until year 5.25 after the
issuance, five years before the effective maturity of 10.25 years.
The proposed hybrid notes will be issued by Pacific National
Finance and guaranteed by Australia-based Pacific National Holdings
Pty Ltd (Pacific National, BBB-/Negative). The proceeds will be
used for repayment of drawn bank debt and general corporate
purposes.
The deeply subordinated notes have an option to defer coupon
payments, which will be unconstrained for 10.25 years after the
issuance. These features are reflected in the 'BB' rating. The 50%
equity credit reflects the cumulative interest coupon, a feature
that is more debt-like in nature.
For further information on Pacific National's rating, see Fitch
Revises Outlook on Pacific National to Negative; Affirms at 'BBB-',
published 2 September 2024.
Key Rating Drivers
Ratings Reflect Deep Subordination: The notes are rated two notches
below Pacific National's senior unsecured rating of 'BBB-', given
their deep subordination relative to its senior obligations. The
notes are ranked only above junior claims such as those of equity
shareholders.
Equity Treatment: The new securities will qualify for 50% equity
credit as they are deeply subordinated, have a remaining effective
maturity of at least five years, provide full discretion to defer
coupons for at least five years and have limited events of default.
These are key equity-like characteristics, affording Pacific
National greater financial flexibility.
The interest coupon deferrals are cumulative, a feature that is
more debt-like in nature, resulting in 50% equity treatment and 50%
debt treatment of the hybrid notes by Fitch. Fitch treats coupon
payments as 100% interest despite the 50% equity treatment.
Mandatory Interest Payment Possible: Pacific National will be
obliged to make a mandatory settlement of deferred interest
payments under certain circumstances, including the declaration of
a cash dividend 10.25 years after the issuance date. Under the
existing shareholders' agreement, the dividend policy is flexible
and may be adjusted to maintain an investment-grade rating
threshold. However, Fitch believes perceived deterioration in the
shareholders' agreement, leading to decreasing flexibility in the
dividend policy, could negatively affect the equity credit of the
hybrid notes.
Effective Maturity Date: Fitch deems the effective remaining
maturity as the date from which the issuer will have a constrained
interest deferral option - 10.25 years from the issuance - although
the proposed hybrid has a maturity of 30 years. The equity credit
of 50% would change to 0% five years before the effective maturity
date. The issuer has the option to redeem the notes in the three
months immediately preceding, including the first reset date, which
is at least 5.25 years from the expected issue date, and on any
coupon payment date thereafter.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade:
- Pacific National's inability to achieve improved operational
performance or asset disposal, whereby EBITDA net leverage remains
above 4.5x and EBITDA interest cover below 3.5x on a sustained
basis;
- Negative developments in Fitch's long-term outlook for thermal
coal;
- Pacific National's material loss of take-or-pay contracts and
market share in the intermodal or freight businesses.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade:
The Outlook on Pacific National could be revised to Stable if
cost-saving targets lead to improved financial performance, or if
debt is reduced through capital management initiatives, such that
EBITDA net leverage falls to below 4.5x and EBITDA interest
coverage improves to above 3.5x on a sustained basis.
Liquidity and Debt Structure
Pacific National had cash on hand of AUD49 million and access to
AUD670 million of undrawn revolving credit facilities at end-June
2024, which were sufficient to cover its AUD350 million bond
maturing in September 2023.
Issuer Profile
Pacific National is one of the largest providers of above-rail
freight haulage services in Australia. It hauls a range of bulk
goods for domestic and export consumption, including containerised
freight, coal, grain, and construction and infrastructure materials
such as steel. Pacific National is the largest provider of
long-haul intermodal rail services in Australia with a rail market
share of 65% on the east-west corridor.
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.
Entity/Debt Rating
----------- ------
Pacific National
Finance Pty Ltd
junior subordinated LT BB New Rating
PANORAMA AUTO 2024-4P: Fitch Assigns B(EXP) Rating on Cl. F Notes
-----------------------------------------------------------------
Fitch has assigned expected ratings to Panorama Auto Trust
2024-4P's pass-through floating-rate notes. The notes are backed by
a pool of first-ranking Australian automotive lease and loan
receivables originated by Angle Auto Finance Pty Ltd (AAF). The
notes will be issued by Perpetual Corporate Trust Limited as
trustee for Panorama Auto Trust 2024-4P.
AAF was formed in June 2021 through a joint venture between
Cerberus Capital Management, L.P. (80%) and Deutsche Bank AG,
Sydney Branch (20%). In March 2022, AAF completed the acquisition
of Westpac Banking Corporation's (WBC, AA-/Stable/F1+) motor
vehicle dealer finance and novated leasing business.
The acquisition included front book origination relationships with
dealer groups and novated leasing introducers, as well as the
majority of the business's employees in the areas of sales and
distribution, credit, underwriting and risk. Origination processes,
underwriting policies and procedures, and collections processes are
consistent with those that were in place at WBC.
Entity/Debt Rating
----------- ------
Panorama Auto
Trust 2024-4P
A LT AAA(EXP)sf Expected Rating
B LT AA(EXP)sf Expected Rating
C LT A(EXP)sf Expected Rating
Commission Note LT NR(EXP)sf Expected Rating
D LT BBB(EXP)sf Expected Rating
E LT BB(EXP)sf Expected Rating
F LT B(EXP)sf Expected Rating
G LT NR(EXP)sf Expected Rating
Transaction Summary
The total collateral pool at the 30 September 2024 cut-off date was
AUD581.5 million and consisted of 13,248 receivables with a
weighted-average (WA) seasoning of 3.3 months, WA remaining
maturity of 55.0 months and an average contract balance of
AUD43,893.
KEY RATING DRIVERS
Stress Commensurate with Ratings: Its base-case gross-loss
expectations and 'AAAsf' default multiples are as follows:
Novated leases: 1.00% (7.75x)
Consumer loans: 3.50% (5.50x)
Commercial loans: 3.25% (5.75x)
The recovery base case for electric vehicles (EVs) is 24.0%, with a
'AAAsf' recovery haircut of 60.0% and for non-EVs 35.0%, with a
'AAAsf' recovery haircut of 50.0%. The WA base-case default
assumption is 2.5% and the 'AAAsf' default multiple is 5.9x.
The transaction features a substitution period ending in March
2027. The eligibility criteria and portfolio parameters shape the
proxy portfolio used to drive the asset analysis. The proxy
portfolio reflects the assumption that portfolio characteristics
may migrate towards the limits during the substitution period,
including on products, asset type, obligor size and concentration.
Fitch assumed novated loans account for 40% of the pool, consumer
loans 50% and commercial loans 10%, while 20% of the pool is
collateralised by EVs.
Commission Note Repayment Limits Excess Spread: The transaction
includes a commission note to fund the purchase-price component
related to the unamortised commission paid to introducers for the
origination of the receivables. The note will not be collateralised
and will amortise in line with an amortisation schedule. Its
repayment limits the availability of excess spread to cover losses,
as it ranks senior in the interest waterfall, above the class B to
F notes.
Structural 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. The transaction is also
bound by substitution termination events during the substitution
period to mitigate risk from potential losses. Included, among
other triggers, is a pool parameter trigger that ensures the
availability of sufficient asset yield.
After the substitution period, principal is initially paid
sequentially from the class A to G notes. Class A to F notes will
receive principal repayments pro rata upon satisfaction of the
step-down criteria. The percentage of credit enhancement provided
by the G note will increase as the A to F notes amortise. 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. All notes have passed their relevant rating stresses.
Low Operational and Servicing Risk: All receivables were originated
by AAF, which demonstrated adequate capability as originator,
underwriter and servicer. Servicer disruption risk is mitigated by
backup servicing arrangements. The nominated backup servicer is
Perpetual Corporate Trust. Fitch undertook an operational review
and found that the operations of the originator and servicer were
comparable with those of other auto lenders.
No Residual Value Risk: There is no residual value exposure in this
transaction.
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% and increasing to
4.5% next year. This reflects Fitch's expectation that the effects
of restrictive monetary policy and persistent inflation will
continue to hinder domestic demand.
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.
Unanticipated deterioration in the frequency of defaults and
recovery rates on defaulted receivables could produce loss levels
higher than Fitch's base case, and are likely to result in a
decline in credit enhancement and remaining loss-coverage levels
available to the notes. Decreased credit enhancement 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.
Downside Sensitivities
Note: A / B / C / D / E / F
Expected Ratings: AAAsf / AAsf / Asf / BBBsf / BBsf / Bsf
Rating Sensitivity to Increased Default Rates
Increase defaults by 10%: AA+sf / AA-sf / A-sf / BBBsf / BBsf /
less than Bsf
Increase defaults by 25%: AAsf / A+sf / BBB+sf / BBB-sf / BB-sf /
less than Bsf
Increase defaults by 50%: AA-sf / A-sf / BBBsf / BBsf / Bsf / less
than Bsf
Rating Sensitivity to Reduced Recovery Rates
Recoveries decrease 10%: AAAsf / AAsf / Asf / BBBsf / BBsf / Bsf
Recoveries decrease 25%: AA+sf / AA-sf / Asf / BBBsf / BBsf / less
than Bsf
Recoveries decrease 50%: AA+sf / AA-sf / A-sf / BBB-sf / BB-sf /
less than Bsf
Rating Sensitivity to Increased Defaults and Reduced Recovery
Rates
Defaults increase 10%/recoveries decrease 10%: AA+sf / AA-sf / A-sf
/ BBB-sf / BB-sf / less than Bsf
Defaults increase 25%/recoveries decrease 25%: AAsf / Asf / BBB+sf
/ BB+sf / B+sf / less than Bsf
Defaults increase 50%/recoveries decrease 50%: A+sf / BBB+sf /
BBB-sf / BB-sf / less than Bsf / less than Bsf
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Positive rating action could result from economic conditions, loan
performance and credit losses that are better than Fitch's baseline
scenario or sufficient build-up of credit enhancement that would
fully compensate for credit losses and cash flow stresses
commensurate with higher rating scenarios, all else being equal.
The class A notes are at the highest level on Fitch's scale and
cannot be upgraded.
Note: B / C / D / E / F
Expected Rating: AAsf / Asf / BBBsf / BBsf / Bsf
Reduce defaults by 10% and increase recoveries by 10%: AA+sf / A+sf
/ 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 reviewed the results of a third-party assessment conducted on
the asset portfolio information, and concluded that there were no
findings that affected the rating analysis.
Overall, 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
Panorama Auto Trust 2024-4P, for which EVs form 16.1% of the pool
at closing, has an ESG Relevance Score (RS) of '4' (impact on
credit) for Energy Management, above the baseline RS of '2' (no
impact) for this issue in the Australian auto sector, due to the
limited credit performance data for EVs. Available market data show
notable differences in recoveries between EVs and non-EVs. Fitch's
analytical approach for the transaction was not adjusted purely due
to the "green" nature of the underlying collateral, but Fitch
referenced available market data for EVs in determining 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 RESIDENTIAL 39: Moody's Ups Rating on Class E Notes to Ba1
-----------------------------------------------------------------
Moody's Ratings has upgraded ratings on four classes of notes
issued by Pepper Residential Securities Trust No. 39.
The affected ratings are as follows:
Issuer: Pepper Residential Securities Trust No. 39
Class B Notes, Upgraded to Aa1 (sf); previously on Feb 28, 2024
Definitive Rating Assigned Aa2 (sf)
Class C Notes, Upgraded to Aa3 (sf); previously on Feb 28, 2024
Definitive Rating Assigned A2 (sf)
Class D Notes, Upgraded to Baa1 (sf); previously on Feb 28, 2024
Definitive Rating Assigned Baa2 (sf)
Class E Notes, Upgraded to Ba1 (sf); previously on Feb 28, 2024
Definitive Rating Assigned Ba2 (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 (1) an increase in credit enhancement
available to the affected notes and (2) the collateral performance
to date.
No actions were taken on the remaining rated classes in the deal as
credit enhancement remains commensurate with the current rating for
the respective notes.
Following the November 2024 payment date, credit enhancement
available for the Class B, Class C, Class D, and Class E has
increased to 7.4%, 6.4%, 4.0%, and 2.8%, respectively, from 5.3%,
4.6%, 2.9%, and 2.0% at closing. Principal collections have been
distributed on a pro-rata basis between Class A1-a and Class A2
Notes. Current outstanding pool balance as a percentage of the
closing pool balance is 72.3%.
As of end-October 2024, 3.0% of the outstanding pool was 30-plus
day delinquent and 1.0% was 90-plus day delinquent. The deal has
not incurred any losses to date.
Based on the observed performance to date and loan attributes,
Moody's have maintained Moody's expected loss assumption at 1.3% of
the original pool balance (equivalent to 1.8% of the outstanding
pool balance) from closing. Moody's have also maintained Moody's
MILAN CE at 7.4% from closing.
The transaction is an Australian RMBS secured by a portfolio of
residential mortgage loans, originated by Pepper Homeloans Pty
Limited and serviced by Pepper Money Limited. A portion of the
portfolio consists of loans extended to borrowers with prior credit
impairment or made on an alternative documentation basis.
The principal methodology used in these ratings was "Residential
Mortgage-Backed Securitizations" published in October 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 credit enhancement
available for the notes.
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 credit enhancement available
for the notes and (3) a deterioration in the credit quality of the
transaction counterparties.
PHIL TERRY: First Creditors' Meeting Set for Dec. 11
----------------------------------------------------
A first meeting of the creditors in the proceedings of Phil Terry
Healthcare QLD Pty Ltd will be held on Dec. 11, 2024 at 11:30 a.m.
via teleconference from the offices of KPT Restructuring.
Jason Tang & Ozem Kassem were appointed as administrators of the
company on Nov. 30, 2024.
PROFINISH SERVICES: First Creditors' Meeting Set for Dec. 12
------------------------------------------------------------
A first meeting of the creditors in the proceedings of Profinish
Services Pty Ltd and Profinish Fire Protection Pty Ltd will be held
on Dec. 12, 2024 at 11:30 a.m. and 12:00 a.m., respectively, via
videoconference only.
Stephen Dixon and Leon D'Souza of Hamilton Murphy were appointed as
administrators of the company on Dec. 2, 2024.
RESIMAC BASTILLE 2022-2NC: Moody's Ups Cl. F Notes Rating to Ba2
----------------------------------------------------------------
Moody's Ratings has upgraded ratings on three classes of notes
issued by RESIMAC Bastille Trust Series 2022-2NC.
The affected ratings are as follows:
Issuer: RESIMAC Bastille Trust Series 2022-2NC
Class C Notes, Upgraded to Aaa (sf); previously on Apr 15, 2024
Upgraded to Aa1 (sf)
Class D Notes, Upgraded to Aa3 (sf); previously on Apr 15, 2024
Upgraded to A1 (sf)
Class F Notes, Upgraded to Ba2 (sf); previously on Apr 15, 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 (1) an increase in credit enhancement
available to the affected notes and (2) the collateral performance
to date.
No actions were taken on the remaining rated classes in this deal
as credit enhancement remains commensurate with the current rating
for the respective notes.
Following the November 2024 payment date, credit enhancement
available for the Class C, Class D and Class F Notes has increased
to 14.2%, 9.3% and 3.7% respectively, from 9.3%, 6.2%, and 2.3% at
the time of the last rating action for these notes in April 2024.
Principal collections have been distributed on a sequential basis
starting from the most senior class of notes.
As of October 2024, current outstanding pool as a percentage of the
closing pool was 33.3%. 7.0% of the outstanding pool was 30-plus
day delinquent and 3.7% was 90-plus day delinquent. The deal has
not incurred any losses to date.
Based on the observed performance to date and loan attributes,
Moody's have maintained Moody's expected loss assumption at 0.8% of
the original pool balance (equivalent to 2.4% of the outstanding
pool balance, compared to 1.6% of the outstanding pool balance as
of the last rating action). Moody's have also maintained Moody's
MILAN CE assumption at 9.6% from the last rating action.
The transaction is an Australian RMBS secured by a portfolio of
residential mortgage loans, originated by RESIMAC Limited, an
Australian non-bank mortgage lender. A portion of the portfolio
consists of loans extended to borrowers with impaired credit
histories or made on a limited documentation basis.
The principal methodology used in these ratings was "Residential
Mortgage-Backed Securitizations" published in October 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 credit enhancement
available for the notes.
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 credit enhancement available
for the notes and (3) a deterioration in the credit quality of the
transaction counterparties.
ROSSLYN HILL: First Creditors' Meeting Set for Dec. 11
------------------------------------------------------
A first meeting of the creditors in the proceedings of Rosslyn Hill
Mining Pty Ltd will be held on Dec. 11, 2024 at 12:00 p.m. via
online/electronic means only.
Ernie Chou and Trent McMillen of MaC Insolvency were appointed as
administrators of the company on Dec. 1, 2024.
SAPPHIRE XXXI 2024-3: S&P Assigns Prelim. B+ Rating on F Notes
--------------------------------------------------------------
S&P Global Ratings assigned its preliminary ratings to eight
classes of nonconforming and prime residential mortgage-backed
securities (RMBS) to be issued by Permanent Custodians Ltd. as
trustee of Sapphire XXXI Series 2024-3 Trust. Sapphire XXXI Series
2024-3 Trust is a securitization of nonconforming and prime
residential mortgages originated by Bluestone Group Pty Ltd. and
Bluestone Mortgages Pty Ltd. (collectively Bluestone).
The preliminary ratings S&P has assigned to the floating-rate RMBS
reflect the following factors.
The credit risk of the underlying collateral portfolio and the
credit support provided to each class of notes are commensurate
with the ratings assigned. Note subordination and excess spread
provide credit support. S&P's assessment of credit risk considers
Bluestone's underwriting standards and approval process, and
Bluestone's strong servicing quality.
The rated notes can meet timely payment of interest and ultimate
payment of principal under the rating stresses. Key rating factors
are the level of subordination provided, the provision of a
liquidity facility, the principal draw function, the yield reserve,
retention amount built from excess spread, and the provision of an
extraordinary expense reserve. S&P's analysis is on the basis that
the rated notes are fully redeemed via the principal waterfall
mechanism under the transaction documents by their legal final
maturity date, and it assumes the notes are not called at or beyond
the call-option date.
S&P's ratings also consider the counterparty exposure to
Commonwealth Bank of Australia as bank account provider and
National Australia Bank Ltd. as liquidity facility provider. The
transaction documents for the facilities include downgrade language
consistent with S&P Global Ratings' counterparty criteria.
S&P has also factored into its ratings the legal structure of the
trust, which is established as a special-purpose entity and meets
its criteria for insolvency remoteness.
Preliminary Ratings Assigned
Sapphire XXXI Series 2024-3 Trust
Class A1S, A$168.00 million: AAA (sf)
Class A1L, A$300.00 million: AAA (sf)
Class A2, A$63.00 million: AAA (sf)
Class B, A$33.12 million: AA (sf)
Class C, A$12.48 million: A (sf)
Class D, A$10.80 million: BBB (sf)
Class E, A$8.10 million: BB (sf)
Class F, A$2.10 million: B+ (sf)
Class G1, A$1.20 million: Not rated
Class G2, A$1.20 million: Not rated
WISE INVESTMENT: ASIC Bans Sole Director for 7 Years
----------------------------------------------------
The Australian Securities & Investments Commission (ASIC) has
banned SA-based former financial adviser Bruce Stuart Davis from
providing financial services, controlling an entity that carries on
a financial services business or performing any function involved
in the carrying on of a financial services business.
Mr. Davis was the sole director, responsible manager, and financial
adviser of AFS Licensee, Wise Investment Advisers Pty Ltd (WIA).
ASIC observed that Mr. Davis in relation to derivatives:
* provided unlicensed advice and dealing services;
* failed to act in his clients' best interests, provided
inappropriate advice and failed to provide statements of
advice to clients;
* made misleading and deceptive representations to clients
regarding the high returns they would achieve form his
recommendations and trading; and
* caused significant financial losses for his clients.
Further ASIC considered that Mr. Davis' failure to acknowledge or
accept responsibility not only for the contraventions stemming from
his advice and trading in derivatives on behalf of clients, but
also for the losses his advice and trading has caused his clients
reflect poorly on his fitness and propriety to be involved in
financial services.
Mr. Davis' banning has been recorded in ASIC's banned and
disqualified register.
Mr. Davis has a right to appeal to the Administrative Appeals
Tribunal for a review of ASIC's decision.
Mr. Davis was a financial adviser appointed by WIA between June 3,
2015 and Aug. 29, 2024.
Mr. Davis is the author of two self-published books, 'How to Build
Riches' and 'Invest Wisely and Grow Rich'.
On Aug. 29, 2024, Michael Van Dissel was appointed as the
liquidator to WIA. Mr. Van Dissel can be contacted on 08 8212 7788
and creditor@bernardimartin.com.au.
If former clients of WIA believe they have suffered loss because of
misconduct by Mr. Davis, they should consider making a complaint to
the Australian Financial Complaints Authority.
=================
H O N G K O N G
=================
CHINA AIRCRAFT: Fitch Affirms & Withdraws 'BB+' LongTerm IDR
------------------------------------------------------------
Fitch Ratings has affirmed China Aircraft Leasing Group Holdings
Limited's (CALC) Long-Term Issuer Default Rating (IDR) at 'BB+' and
Short-Term IDR at 'B'. The Outlook is Negative. Fitch has also
affirmed the long-term rating on the senior unsecured notes and the
medium-term note (MTN) programme issued by CALC Bonds Limited at
'BB+'.
At the same time, Fitch has withdrawn all the ratings for
commercial reasons. Therefore, Fitch will no longer provide rating
or analytical coverage on CALC.
Key Rating Drivers
Heightened Leverage Pressure: CALC's leverage, measured by debt to
tangible equity ratio, increased to 13x by end-1H24, from 11.9x at
end-2023. The increase in leverage was due to weakened
profitability and slower deleveraging than Fitch expected amid
elevated US dollar interest rates. Fitch anticipates that the
company will expedite trading activities in the rest of 2024 and
2025 to enhance its profitability, liquidity and capital profile.
However, continued high US dollar interest rates could potentially
slow down the execution of trading activities.
The Negative Outlook reflects CALC's weakened capital profile and
raised leverage, as well as the increased execution risk associated
with its deleveraging objectives. This raises the pressure on the
company's standalone credit profile (SCP) and could ultimately lead
to a downgrade of its IDR if the high leverage persists.
Notching-Up Approach: CALC's IDR benefits from two notches of
uplift from its 'bb-' SCP. The uplift reflects Fitch's expectation
for modest potential support from state-owned China Everbright
Group (CEG), which controls about 19% of CALC's effective interest.
Its expectation stems from the strategic objective alignment
between the two, CEG's strong control over CALC, and a record of
ordinary liquidity support from CEG group to CALC.
The application of the notching-up approach, instead of top-down,
is driven by CEG's limited shareholding control, the lack of common
branding, and complexities in legal commitments to CALC from CEG
group.
Modest SCP: Its assessment of CALC's SCP considers its modest
franchise, high leverage, and high lessee and geographic
concentration relative to higher-rated peers, as well as
substantial financing and refinancing needs due to a large order
book and debt maturities in the coming years. However, the
company's moderate asset-quality risk - featuring a liquid fleet
portfolio and limited exposure to troubled airline companies - and
adequate funding access mitigate these risks.
Weakened Profitability: CALC's profitability remains under pressure
with annualised net spread - defined as lease yields less funding
costs - further contracting to 4.7% in 1H24 from 5.9% in 2023,
compared with a four-year average of 6.0% in 2020-2023. The
contraction was mainly due to rising funding expenses for its
expanded portfolio. The portfolio expansion has also led to higher
operating and depreciation expenses, resulting in subdued reported
pretax return on average assets that remained at 1% in 1H24 despite
some reversals of impairment charges on lease receivables.
Moderate Asset-Quality Risk: CALC's portfolio is small and
concentrated relative to higher-rated global peers. Nevertheless,
it has maintained an in-demand, fuel-efficient fleet, with about
90% of its portfolio consisting of narrow-body aircraft (by
aircraft count). The average age of its fleet was 8.1 years at
end-1H24, with an average remaining lease term of 5.9 years. CALC's
exposure to lessees domiciled in China is higher compared with
global peers. However, its exposure is mainly to the three largest
domestic airlines and their affiliates, whose strong government
backing mitigates concentration risk.
Adequate Funding Profile: Fitch estimates that CALC's liquidity
coverage for the next 12 months will remain weaker than that of
rated peers as it faces significant financing and refinancing
needs. However, its funding profile benefits from large undrawn
uncommitted credit lines, continued access to secured and unsecured
markets and ordinary support from the CEG group. Its unsecured debt
declined to 46% of total debt at end-1H24, against a four-year
average of 53% in 2020-2023, but it remained adequately covered by
unencumbered assets at 1.3x.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative
Rating Action/Downgrade
Rating sensitivities do not apply, as the ratings have been
withdrawn.
Factors that Could, Individually or Collectively, Lead to Positive
Rating Action/Upgrade
Rating sensitivities do not apply, as the ratings have been
withdrawn.
DEBT AND OTHER INSTRUMENT RATINGS: KEY RATING DRIVERS
The rating on the MTN programme under CALC Bonds Limited and the
senior unsecured notes issued under the MTN programme are equalised
with CALC's 'BB+' Long-Term IDR, as the MTN programme and the notes
are unconditionally and irrevocably guaranteed by CALC, and will at
all times rank at least equally with all other present and future
unsecured and unsubordinated obligations of CALC and CALC Bonds
Limited.
DEBT AND OTHER INSTRUMENT RATINGS: RATING SENSITIVITIES
Rating sensitivities do not apply, as the ratings have been
withdrawn.
ADJUSTMENTS
The asset-quality score has been assigned below the implied score
due to the following reason: concentrations.
The funding and liquidity score has been assigned above the implied
score due to the following reason: business model/funding market
convention.
ESG Considerations
CALC has an ESG Relevance Score of '4' for Management Strategy due
to the increasing execution risk in achieving its deleveraging
target amid possibly sustained high US dollar interest rates, 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.
Following the withdrawal of ratings for CALC, Fitch will no longer
be providing the associated ESG Relevance Scores.
Entity/Debt Rating Prior
----------- ------ -----
China Aircraft
Leasing Group
Holdings Limited LT IDR BB+ Affirmed BB+
LT IDR WD Withdrawn
ST IDR B Affirmed B
ST IDR WD Withdrawn
CALC Bonds Limited
senior unsecured LT BB+ Affirmed BB+
senior unsecured LT WD Withdrawn
=========
I N D I A
=========
AGROW FOODS: CARE Keeps D Debt Rating in Not Cooperating Category
-----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Agrow Foods
(AF) continues to remain in the 'Issuer Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 10.00 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated December 1,
2023, placed the rating(s) of AF under the 'issuer non-cooperating'
category as AF had failed to provide information for monitoring of
the rating as agreed to in its Rating Agreement. AF continues to be
non-cooperative despite repeated requests for submission of
information through e-mails dated October 16, 2024, October 26,
2024 and November 5, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Analytical approach: Standalone
Agrow Foods (AF) was established in the year 2015 by Mr. Swapnil
Munde and is engaged in the trading and processing of food grains
(pulses) at Nagpur, Maharashtra. The commercial operations of the
entity started in the month of September, 2015.
CA MAGNUM: Moody's Affirms 'B1' CFR, Outlook Remains Negative
-------------------------------------------------------------
Moody's Ratings has affirmed the B1 corporate family rating of CA
Magnum Holdings (CAMH) -- the special-purpose investment holding
company formed by affiliates of The Carlyle Group Inc. to invest in
IT solutions provider Hexaware Technologies Limited (Hexaware).
Moody's have also affirmed the B1 rating on CAMH's $1,010 million
senior secured notes due 2026, and maintained the negative
outlook.
"The affirmation of CAMH's B1 CFR reflects the continued
improvement in its operating performance, with credit metrics
recovering to levels comfortable for the rating by December 2024.
The affirmation also incorporates Moody's expectation that the
company will refinance its 2026 bond maturity in a timely manner,"
says Sweta Patodia, a Moody's Ratings Assistant Vice President and
Analyst.
"The negative outlook highlights execution risks associated with
the timely refinancing of the company's USD bond, especially given
its large size and it being the sole debt in the company's capital
structure," adds Patodia, who is also Moody's lead analyst for
CAMH.
RATINGS RATIONALE
Hexaware's revenue grew to $1,057 million during the nine months
ended September 2024 (9M 2024), a 12.2% increase from the same
period last year, driven by the company's strong deal wins and
continued demand for its services. Meanwhile, its EBITA margin
stayed around 14% over the same period with stable employee costs
as attrition rates continued to decline from the high levels in
2022.
Hexaware's revenues will continue to grow by 10%-12% over the next
1-2 years, supported by a stable macroeconomic environment and
declining interest rates, which will fuel higher corporate IT
spending. At the same time, its EBITA margins will likely remain at
or near current levels.
Higher earnings will support an improvement in CAMH's credit
metrics, such that debt/EBITDA will decline to around 4.4x by 2026
from 5.4x as of December 2023. At the same time, its interest
coverage as measured by EBITA/Interest will remain strongly
positioned around 3.5x-4.0x over the next two years. The expected
improvement in credit metrics positions CAMH appropriately for its
B1 CFR.
Notwithstanding, any positive momentum on its ratings is unlikely
until the company refinances its $1,010 million bond that matures
in 2026. Despite plans to refinance the bond through a bank loan
over the next 6-12 months, the exact timing of the refinancing
remains uncertain, which exposes the company to market risks and
drives the negative outlook on its ratings.
In September 2024, Hexaware filed a draft red herring prospectus
(DHRP) for a potential listing on the Indian stock exchanges. The
planned share sale will be a secondary offering by Carlyle to
divest its stake in Hexaware. While the proceeds from this sale may
be used to repay bonds, its management has not yet finalized the
allocation of these funds.
CAMH has good liquidity. Hexaware's cash and cash equivalents of
$159 million as of September 2024, along with its expected cash
flow from operations, will be sufficient to meet its capital
spending and shareholder payment obligations over the next two
years through September 2026.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
An upgrade of the ratings remains unlikely over the next 12 months,
given the negative outlook.
Moody's could revise the outlook to stable if (1) CAMH addresses
its bond maturity on a timely basis and maintains good liquidity;
and (2) Hexaware's earnings continue to improve, such that the
consolidated leverage at CAMH, as measured by debt/EBITDA, is
sustained around 4.5x-5.0x.
Moody's would downgrade the rating if CAMH fails to address its
bond maturity over the next 12 months. A downgrade is also likely
if Hexaware's earnings fail to improve, such that the consolidated
leverage at CAMH remains above 4.5x-5.0x. The ratings will also
come under pressure if CAMH adopts a more aggressive financial
policy that results in increased borrowings, reduced liquidity or
higher-than-anticipated shareholder returns.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
CAMH is an investment holding company formed by affiliates of The
Carlyle Group Inc. to hold their 95.54% stake in Hexaware
Technologies Limited. The company does not have any other
operations, employees or real investments.
Hexaware is an IT and business transformation service provider with
headquarters in Mumbai and 37 offices across the globe. The company
provides technology solutions through several diversified service
lines, including digital product engineering, cloud transformation,
digital core transformation, enterprise and next-generation
services, business process services and digital IT operations.
Hexaware recorded around $1.4 billion in revenues for the 12 months
ended September 2024, of which around 72% were from customers in
the Americas, 22% from Europe and 6% from Asia-Pacific.
DHANRAJ COTTON: CARE Keeps B- Debt Rating in Not Cooperating
------------------------------------------------------------
CARE Ratings said the ratings for the bank facilities of Dhanraj
Cotton Industries (DCI) continue to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 12.00 CARE B-; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated December 1,
2023, placed the rating(s) of DCI under the 'issuer
non-cooperating' category as DCI had failed to provide information
for monitoring of the rating as agreed to in its Rating Agreement.
DCI continues to be non-cooperative despite repeated requests for
submission of information through emails dated October 16, 2024,
October 26, 2024 and November 5, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Analytical approach: Standalone
Outlook: Stable
Dhanraj Cotton Industries (DCI) is a Hinganghat based, partnership
firm, established by Mr. Dilip Rathi and Sudha Rathi in 2012. The
entity is engaged in the business of cotton ginning and pressing.
The entity is also into trading of cotton bales and cotton.
EAST WEST PHARMA: CARE Lowers Rating on INR10cr LT Loan to B-
-------------------------------------------------------------
CARE Ratings has revised the ratings on certain bank facilities of
East West Pharma (EWP), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 10.00 CARE B-; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category and
Downgraded from CARE B; Stable
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated October 30,
2023, placed the rating(s) of EWP under the 'issuer
non-cooperating' category as EWP had failed to provide information
for monitoring of the rating as agreed to in its Rating Agreement.
EWP continues to be non-cooperative despite repeated requests for
submission of information through emails dated September 14, 2024,
September 24, 2024 and October 4, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings assigned to the bank facilities of EWP have been
revised on account of non-availability of requisite information.
Analytical approach: Standalone revised from combined
For the purpose of analysis, CARE has combined financials of three
entities of the East West Pharma (Sikkim) and its group, East West
Pharma- Unit II, Roorkee, and East West Pharma (Guwahati) since
these entities are engaged similar industry, and have common
management along with having significant operational and financial
linkages. However, updated information is not available to
ascertain financial linkages that warrant a continuation of
combined approach.
Outlook: Stable
East West Pharma is a Tamil Nadu based closely held firm,
established in 2010 is engaged in manufacturing of drug
formulations and pharmaceuticals products from its three
manufacturing facilities located in the states of Sikkim, Assam and
Uttarakhand respectively. All the units are ISO 9001:2015
accredited and WHO-GMP certified facility. EWP Associates, a
marketing and distribution division and Chennai National Hospital
(CHN), a multispecialty hospital which are the units of East West
Pharma (Sikkim) and its group and was established in 2015 and 2016
respectively.
ESSEL GROUP: Acre ARC Wins Bid to Take Over Groups' Bad Loans
-------------------------------------------------------------
The Economic Times reports that Acre ARC has emerged as the
successful bidder to take over the INR1,350 crore debt of Subhash
Chandra's Essel Group and also INR2,613 crore debt of a portfolio
of retail and SME loans from JC Flowers ARC (JCF) as the $378
billion Ares SSG-backed bad loan aggregator consolidates its
portfolio in India.
In both cases, Acre had submitted an anchor bid which has not been
challenged. Acre had bid INR237 crore binding bid at 9% all cash to
acquire INR2,613-crore debt for a portfolio of retail and SME
loans, which was bought from Yes Bank by JCF while it had submitted
a INR505 crore bid to acquire five non-performing loan (NPL)
accounts associated with Subhash Chandra's Essel Group against
total outstanding debt of INR1,350 crore in October, ET relates. An
Acre spokesperson confirmed that they have emerged as the
successful bidders in both cases.
The Essel linked loans included NPLs from five Essel Group entities
namely Pan India Network Infravest, with INR727 crore of total
outstanding, Taleem Research Foundation with INR379 crore total
outstanding, Mount Litera Education Foundation with INR114 crore
outstanding, Zee Learn Education Society with INR98 crore and
Gyanmala Public Education Trust with INR34 crore total outstanding
loans, ET had reported in October.
The five accounts were also part of the portfolio of Yes Bank loans
transferred to JCF in December 2022.
Essel Group owed INR6,500 crore to Yes Bank, which were transferred
to JCF as part of the INR48,000 crore stressed loans the bank sold
to the bad loan aggregator, ET notes.
About Essel Group
Essel Group, a business conglomerate, operates in media,
entertainment, packaging, infrastructure, education, precious
metals, lifestyle and wellness, and technology sectors. The
company's activities include operating news and entertainment
television channels; DNA, an English-language broadsheet; amusement
parks and lifestyle malls; operating a chain of commercial
complexes, housing complexes, construction business, and multiplex
cinema-cum-family activity centers; digital screens; a food and
lifestyle television channel; and a chain of K-12 schools and
pre-schools. The company also provides direct-to-home entertainment
services and information technology infrastructure outsourcing
services.
INMARK RETAIL: CARE Keeps D Debt Rating in Not Cooperating
----------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Inmark
Retail Private Limited (IRPL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 19.05 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated October 25,
2023, placed the rating(s) of IRPL under the 'issuer
non-cooperating' category as IRPL had failed to provide information
for monitoring of the rating as agreed to in its Rating Agreement.
IRPL continues to be non-cooperative despite repeated requests for
submission of information through emails dated September 9, 2024,
September 19, 2024, September 29, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Analytical approach: Standalone
Originally incorporated as M/s. Scotts Dresses Private Limited on
July 23, 2008 by Mr. Naseer Ahmed, the company's name was changed
to M/s. Inmark Retail Private Ltd (IRPL) in September 2011. The
company is engaged in the business of retailing fashion apparels
through various retail shops under the brand INMARK.
JAIPRAKASH ASSOCIATES: NCLAT Rejects Bid Challenging Insolvency
---------------------------------------------------------------
Business Standard reports that the National Company Law Appellate
Tribunal (NCLAT) on Dec. 6 rejected Jaiprakash Associates Ltd's
petition challenging the insolvency proceedings initiated against
the company.
While upholding an earlier order, the appellate tribunal NCLAT
observed mere pending of loan restructuring arrangement with the
lender before NCLT does not debar the creditors to file insolvency
proceedings under section 7 of Insolvency & Bankruptcy Code 2016.
According to Business Standard, a three-member bench led by
Chairperson Justice Ashok Bhushan has upheld the order passed by
the National Company Law Tribunal (NCLT), which had directed
initiating the Corporate Insolvency Resolution Process (CIRP)
against the company.
Business Standard relates that the appellate tribunal said "after
answering all the issues, we are of the view that no grounds have
been made out to interfere in order of NCLT".
"The OTS (one-time settlement) proposal submitted to NCLT and as
well as before this tribunal on behalf of JAL contains the "clear
acknowledgment of debt" and default.
"Hence, we are of the view that the findings returned by the
Adjudicating Authority (NCLT) on the debt and default are based on
materials on record and are affirmed by us," it said.
Business Standard says NCLAT also upheld banking sector regulator
RBI's "statutory authorisation" to direct any banking company to
initiate CIRP in respect of default.
Earlier, Reserve Bank of India had on August 14, 2018 directed
ICICI Bank to initiate CIRP against JAL. This was also challenged
by the promoters of the debt-ridden group contending that JAL is
not a defaulter.
NCLAT also noted that the restructuring scheme to make arrangement
with creditors filed by JAL before the NCLT being pending "cannot
have effect of arresting the default or to cause any impediment" in
proceedings under Section 7 application which has to be given
precedent, Business Standard relays.
"We, thus, are satisfied that the pendency of proceedings before
the NCLT for approval of the scheme of arrangement does in no
manner either shall suspend the default which was committed by the
Corporate Debtor or preclude the Financial Creditor to proceed with
Section 7 application," said NCLAT in its 75-page order.
About JAL
Jaiprakash Associates Ltd (JAL) is the flagship company of the
Jaypee group and is engaged in engineering and construction,
cement, real estate and hospitality businesses. JAL was one of the
leading cement manufacturers with an installed capacity of ~28
million tonnes per annum (mtpa) and under implementation capacity
of ~5 mtpa on a consolidated basis as on March 31, 2018. JAL is
also engaged in the construction business in the field of civil
engineering, design and construction of hydro-power, river valley
projects. JAL is also undertaking power generation, power
transmission, real estate, road BOT, healthcare and fertilizer
businesses through its various subsidiaries/SPVs.
JAL featured in Reserve Bank of India's second list of at least 26
defaulters with which it wants creditors to start the process of
debt resolution before initiating bankruptcy proceedings.
In September 2018, ICICI Bank had filed an insolvency petition
against JAL under Section 7 of IBC, claiming a default of more than
INR16,000 crore.
On June 3, 2024, the Allahabad bench of National Company Law
Tribunal (NCLT) admitted the insolvency plea filed by ICICI Bank.
The tribunal also appointed Bhuvan Madan as Interim Resolution
Professional of JAL after suspending the board of the company.
SBI has also moved NCLT against JAL, claiming a total default of
INE6,893.15 crore as of September 15, 2022.
KABRA TRANSPORT: CARE Keeps B- Debt Rating in Not Cooperating
-------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Kabra
Transport Private Limited (KTPL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 7.00 CARE B-; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
To remain under ISSUER NOT
COOPERATING category
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated October 18,
2023, placed the rating(s) of KTPL under the 'issuer
non-cooperating' category as KTPL had failed to provide information
for monitoring of the rating as agreed to in its Rating Agreement.
KTPL continues to be non-cooperative despite repeated requests for
submission of information through e-mails dated September 2, 2024,
September 12, 2024, September 22, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings assigned to the bank facilities of KTPL have been
revised on account of non-availability of requisite information.
Analytical approach: Standalone
Outlook: Stable
Jamshedpur (Jharkhand) based, Kabra Transport Private Limited
(KTPL) was incorporated in November 2009. Since its inception, the
company has been engaged in goods transportation services. KTPL
participates in tender to secure its work contracts floated by
large private players like Tata Steel Limited, Jindal Steel & Power
Ltd.
KALPAK INDUSTRIAL: CRISIL Keeps D Debt Ratings in Not Cooperating
-----------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Kalpak
Industrial Technologies (India) Private Limited (KITIPL) continue
to be 'CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 3.5 CRISIL D (ISSUER NOT
COOPERATING)
Term Loan 5.0 CRISIL D (ISSUER NOT
COOPERATING)
Term Loan 2.5 CRISIL D (ISSUER NOT
COOPERATING)
Term Loan 4 CRISIL D (ISSUER NOT
COOPERATING)
Term Loan 5 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL Ratings has been consistently following up with KITIPL 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 KITIPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on
KITIPL is consistent with 'Assessing Information Adequacy Risk'.
Based on the last available information, the rating on bank
facilities of KITIPL continues to be 'CRISIL D Issuer Not
Cooperating'.
Incorporated in 1996, KITIPL is engaged in manufacturing of
machined components and special types of fasteners such as
automotive components, stud and anchor bolts. Based in Maharashtra,
the company is owned and managed by Mr Prasad Kolte.
LANCO KONDAPALLI: CRISIL Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Lanco
Kondapalli Power Limited (EWF) 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 LKPL 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 LKPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on LKPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
LKPL continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
LKPL is an independent power producer based at Kondapalli
Industrial Development Area near Vijayawada (Andhra Pradesh). The
company has installed capacity of 1,476.14 megawatt. LKPL was
promoted by the Lanco group; Eastern Generation Ltd, UK;
Commonwealth Development Corporation; and Doosan Heavy Engineering,
Korea. Phase I of the project was commissioned in October 2000 at
INR11,000 crore, Phase II in August 2010 at INR11,880 crore, and
Phase III in January 2016.
MACHHI RAM: CRISIL Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Machhi Ram
Kishan Chand Sidana (MRKCS) continue to be 'CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 20 CRISIL D (Issuer Not
Cooperating)
Cash Credit 5 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with MRKCS 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 MRKCS, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on MRKCS
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
MRKCS continues to be 'CRISIL D Issuer Not Cooperating'.
MRKCS, a partnership firm set up in 1983, mills and processes
basmati rice, and caters to wholesalers and distributors, both in
the domestic and export markets. The plant at Jalalabad (Punjab)
has milling capacity of 4 tonne per hour. Mr Surinder Kumar and Mr
Vimal Kumar manage the business.
MALWA FRESH: CARE Keeps B- Debt Rating in Not Cooperating Category
------------------------------------------------------------------
CARE Ratings said the ratings for the bank facilities of Malwa
Fresh Foods (MFF) continue to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 25.50 CARE B-; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated December 1,
2023, placed the rating(s) of MFF under the 'issuer
non-cooperating' category as MFF had failed to provide information
for monitoring of the rating as agreed to in its Rating Agreement.
MFF continues to be non-cooperative despite repeated requests for
submission of information through emails dated October 16, 2024,
October 26, 2024 and November 5, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Analytical approach: Standalone
Outlook: Stable
Malwa Fresh Foods (MFF), based in Bhatinda (Punjab), was
established in January 2014 as a partnership firm. However, the
operations started in April, 2017. The firm is currently being
managed by Mr. Ajay Gupta, Mr. Amit Garg, Mr. Inderjit Singh, Mr.
Mukul Sayal and Mr. Rahul Garg as its partners. The firm has set up
a cold storage facility with at Rampura Phull Punjab. The
firm majorly provides Cold Storage Facility to various renowned
players and local retailers for the storage of seasonal products on
rental basis. The firm is also engaged in trading of seasonal
fruits and vegetable as well as frozen food products.
Status of non-cooperation with previous CRA: CRISIL has continued
the ratings assigned to the bank facilities of MFF into 'Issuer
not-cooperating' category vide press release dated October 27, 2023
on account of non-availability of requisite information from the
Firm.
MANGLAM AGROTECH: CARE Lowers Rating on INR29.52cr LT Loan to B-
----------------------------------------------------------------
CARE Ratings has revised rating to the bank facilities of Manglam
Agrotech Private Limited (MAPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 29.52 CARE B-; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category and
Downgraded from CARE B; Stable
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated October 20,
2023, placed the rating(s) of MAPL under the 'issuer
non-cooperating' category as MAPL had failed to provide information
for monitoring of the rating as agreed to in its Rating Agreement.
MAPL continues to be non-cooperative despite repeated requests for
submission of information through e-mails dated September 4, 2024,
September 14, 2024, September 24, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
The ratings assigned to the bank facilities of MAPL have been
revised on account of non-availability of requisite information.
Analytical approach: Standalone
Outlook: Stable
Incorporated in March 2008, Manglam Agrotech Private Limited (MAPL)
is promoted by Mr. Alok Khemka and Mrs. Madhumita Khemkha and is
engaged in rice and wheat milling activities. The company has
commenced the commercial operations of rice processing at its plant
from February 2010 and wheat processing from January 2019. The rice
milling and processing plant of the company is located at Bhadrak,
Odisha. This apart, it has also added pulses processing into besan
with an installed capacity of 10,000 tons per annum during FY21 but
operation of the same is not yet started due to on-going covid
pandemic leading to low demand of besan. The company procures paddy
and wheat from local farmers and traders and after processing, the
final products are sold to distributors/wholesalers in the state of
Odisha, Tamil Nadu, Kerela, West Bengal etc. under its brand
'Manglam'.
METENERE LIMITED: CRISIL Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Metenere
Limited (Metenere) 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 Metenere 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 Metenere, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on
Metenere is consistent with 'Assessing Information Adequacy Risk'.
Based on the last available information, the ratings on bank
facilities of Metenere continues to be 'CRISIL D/CRISIL D Issuer
Not Cooperating'.
Incorporated in 1997, Metenere, promoted by Mr Raman Gupta and his
family, began operations in lead recycling, and subsequently
diversified into manufacturing tin products. In fiscals 2009 and
2010, a new capacity to manufacture aluminium was set up.
Shrey Industries Pvt Ltd (SIPL), part of the Gupta group, was
merged with Metenere, effective April 1, 2012. SIPL manufactured
aluminium billets/extrusions, rods, and alloys from aluminium
scrap.
PRIMUSS PIPES: CRISIL Keeps D Debt Ratings in Not Cooperating
-------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Primuss Pipes
& Tubes Limited (PPL) continue to be 'CRISIL D/CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6.5 CRISIL D (Issuer Not
Cooperating)
Letter of credit 2.5 CRISIL D (Issuer Not
& Bank Guarantee Cooperating)
Proposed Long Term 1.0 CRISIL D (Issuer Not
Bank Loan Facility Cooperating)
CRISIL Ratings has been consistently following up with PPL 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 PPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on PPL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
PPL continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
PPL was set up in 1971 in Kanpur, Uttar Pradesh, by Mr Ajay Kumar
Jain. The company primarily manufactures galvanised iron pipes,
polyvinyl chloride pipes, and electrical poles. Unit has an
installed capacity of around 46,000 tonne per annum, of which
28,000 tonne was utilised in fiscal 2017.
RIME RICH: CRISIL Moves D Debt Ratings to Not Cooperating
---------------------------------------------------------
CRISIL Ratings has migrated the ratings on bank facilities of Rime
Rich Foods Private Limited (RRFPL) to 'CRISIL D/CRISIL D Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Loan 9.5 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
Overdraft Facility 4.5 CRISIL D (Issuer Not
Cooperating; Rating Migrated)
CRISIL Ratings has been consistently following up with RRFPL for
obtaining information through letter and email dated October 11,
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 RRFPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on RRFPL
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
bank facilities of RRFPL to 'CRISIL D/CRISIL D Issuer not
cooperating'.
Incorporated in 2000 in Thrissur, Kerala, and promoted by Mr. John
Johnson, Mr Starson Kandamkulathy and Mr Fineson K J, RRFPL
manufactures ice creams under the Pappai brand.
SHIV COTTON: CARE Keeps C Debt Rating in Not Cooperating Category
-----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Shiv Cotton
Industries (SCI) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 5.40 CARE C; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated October 18,
2023, placed the rating(s) of SCI under the 'issuer
non-cooperating' category as SCI had failed to provide information
for monitoring of the rating as greed to in its Rating Agreement.
SCI continues to be non-cooperative despite repeated requests for
submission of information through emails dated September 2, 2024,
September 12, 2024 and September 22, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Analytical approach: Standalone
SCI was established in November 2011 as a partnership firm by 12
partners for setting up of new ginning and pressing unit with the
installed capacity of 7,668 MT per annum. The manufacturing plant
is situated at Babara (District: Amreli), Gujarat. SCI commenced
its operations from July 2012 onwards.
SHREEDHAR MILK: CRISIL Keeps D Debt Rating in Not Cooperating
-------------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of Shreedhar Milk
Foods Limited (SMFL) continues to be 'CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Rating 330 CRISIL D (ISSUER NOT
COOPERATING)
CRISIL Ratings has been consistently following up with SMFL 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 SMFL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SMFL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
SMFL continues to be 'CRISIL D Issuer Not Cooperating'.
SMFL was incorporated as A Kumar Milk Foods Pvt Ltd in Delhi in
2005; it was renamed in 2011. The company processes milk and sells
milk and milk products. The promoters, Mr. Shyam Goel and his son,
Mr Anirudh Goel, manage the operations.
SHRINATH COTTON: CARE Keeps D Debt Rating in Not Cooperating
------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Shrinath
Cotton Industries (SCI) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 6.03 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated October 18,
2023, placed the rating(s) of SCI under the 'issuer
non-cooperating' category as SCI had failed to provide information
for monitoring of the rating as agreed to in its Rating Agreement.
SCI continues to be non-cooperative despite repeated requests for
submission of information through emails dated September 2, 2024,
September 12, 2024 and September 22, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Analytical approach: Standalone
Shrinath Cotton Industris (SCI) is a partnership firm established
in 2006 by three partners Mr. Keshavlal Popat, Mr. Bharat Popat and
Mrs. RakshaPopat which was later reconstituted with the retirement
of Mr. Keshavlal Popatas on January 18, 2011. It is now managed by
Mr. Bharat Popat and Mrs. Raksha Popat and has its manufacturing
facility at Amreli district, Gujarat. SCI is engaged in the cotton
ginning and pressing business. The firm is ISO 9001:2008 certified
and Technology Mission on Cotton (TMC) approved firm by the
Ministry of Textile, GOI. As on March 31, 2017, SCI had a total
installed capacity of 24,000 bales of cotton and 6,133 metric tonne
per annum (MTPA) of cotton seed.
SHUKRA JEWELLERY: CRISIL Keeps D Debt Ratings in Not Cooperating
----------------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of Shukra
Jewellery Limited (SJL) continues to be 'CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 17.05 CRISIL D (ISSUER NOT
COOPERATING
CRISIL Ratings has been consistently following up with SJL 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 SJL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SJL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
SJL continues to be 'CRISIL D Issuer Not Cooperating'.
SJL, a BSE listed company is completely engaged in the development
of affordable housing real estate from fiscal 2019 but was engaged
in trading of gems and jewellery in the past till fiscal 2018. It
is promoted and is currently being run by Mr. Chandrakant Shah.
SIDHANATH SUGAR: CRISIL Keeps D Debt Ratings in Not Cooperating
---------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Sidhanath
Sugar Mills Limited (SSML) continue to be 'CRISIL D Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Pledge Loan 75 CRISIL D (Issuer Not
Cooperating)
Proposed Working 20 CRISIL D (Issuer Not
Capital Facility Cooperating)
Rupee Term Loan 10 CRISIL D (Issuer Not
Cooperating)
Sugar Pledge 40 CRISIL D (Issuer Not
Cash Credit Cooperating)
Term Loan 25 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SSML 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 SSML, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SSML
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the rating on bank facilities of
SSML continues to be 'CRISIL D Issuer Not Cooperating'.
Incorporated in 2000 and promoted by Mr Dilip Mane, SSML
manufactures sugar at its plant in Tirhe, Maharashtra, which has an
installed capacity of 6,000 tonne crushing per day. It also has a
26-megawatt co-generation power plant.
SIKKIM FERRO: CRISIL Keeps D Debt Ratings in Not Cooperating
------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Sikkim Ferro
Alloys Limited (SFAL) 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 SFAL 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 SFAL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SFAL
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
SFAL continues to be 'CRISIL D/CRISIL D Issuer Not Cooperating'.
SFAL was founded in 1998 by Mr Kamlesh Kanungo, a first-generation
entrepreneur. The company trades in ferroalloys, steel scrap, and
related products. It has also undertaken factory dismantling and
ship breaking to generate and sell scrap.
Mr. Kanungo also established Trisons Impex (rated 'CRISIL D Issuer
not cooperating') as a sole proprietorship firm in 2001; the firm
operates in the same line of business.
Mr. Kanungo oversees the operations of the two entities. The
Kanungo family has various business interests, such as real estate
development and movie production.
SIWAL INFRACON: CARE Keeps C Debt Rating in Not Cooperating
-----------------------------------------------------------
CARE Ratings said the ratings for the bank facilities of Siwal
Infracon Private Limited (SIPL) continue to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 6.28 CARE C; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Long Term/ 4.00 CARE C/CARE A4; ISSUER NOT
Short Term COOPERATING; Rating continues
Bank Facilities to remain under ISSUER NOT
COOPERATING category
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated November 22,
2023, placed the rating(s) of SIPL under the 'issuer
non-cooperating' category as SIPL had failed to provide information
for monitoring of the rating as agreed to in its Rating Agreement.
SIPL continues to be non-cooperative despite repeated requests for
submission of information through e-mails dated October 7, 2024,
October 17, 2024 and October 27, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Analytical approach: Standalone
Jaipur-based (Rajasthan) Siwal Infracon Private Limited (SIPL) was
initially formed in 2004 as a partnership concern in the name of
M/s Siwal Builders & Developers by its key promoter, Mr. Rajesh
Siwal. Subsequently, there was amendment in partnership deed which
was later reconstituted as a private limited company in 2012 with
assuming its present name. Initially, SIPL was primarily engaged in
execution of civil construction contract works pertaining to real
estate projects for private sector companies; however, form FY14
on-wards SIPL had also ventured into executing project related to
commercial and institution with major contracts secured from
private sector clientele located in Rajasthan.
Status of non-cooperation with previous CRA: CRISIL has continued
the rating assigned to the bank facilities of SIPL into Issuer Not
Cooperating category vide press release dated June 24, 2024 on
account of its inability to carry out a review in the absence of
requisite information.
SUBHASH POULTRY: CARE Keeps B- Debt Rating in Not Cooperating
-------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Subhash
Poultry Complex (SPC) continues to remain in the 'Issuer Not
Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 6.00 CARE B-; Stable; ISSUER NOT
Facilities COOPERATING; Rating continues
to remain under ISSUER NOT
COOPERATING category
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated October 19,
2023, placed the rating(s) of SPC under the 'issuer
non-cooperating' category as SPC had failed to provide information
for monitoring of the rating as agreed to in its Rating Agreement.
SPC continues to be non-cooperative despite repeated requests for
submission of information through emails dated September 03, 2024,
September 13, 2024, September 23, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Andhra Pradesh based, Subhash Poultry Complex (SPC) was established
in the year 2016 as a partnership firm and is promoted by Mr.
Srinivasa Rao and his other family members. The partners of the
firm have experience of more than a decade in the poultry business.
The firm is engaged in farming of egg laying poultry birds
(chickens) along with trading of eggs and cull bird.
TRISONS IMPEX: CRISIL Keeps D Debt Ratings in Not Cooperating
-------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Trisons Impex
(TI) continue to be 'CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 5 CRISIL D (Issuer Not
Cooperating)
Cash Credit 30 CRISIL D (Issuer Not
Cooperating)
Proposed Long Term 15 CRISIL D (Issuer Not
Bank Loan Facility Cooperating)
CRISIL Ratings has been consistently following up with TI 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 TI, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on TI is
consistent with 'Assessing Information Adequacy Risk'. Based on the
last available information, the rating on bank facilities of TI
continues to be 'CRISIL D Issuer Not Cooperating'.
Established as a sole proprietorship firm in 2001 by Mr. Kamlesh
Kanungo, TI trades in stainless steel scrap, and finished steel
products such as sheets, plates, pipes, billets, and coils. It also
trades in ferro alloys having a high proportion of non-ferrous
elements such as copper, aluminium, and nickel.
Sikkim Ferro Alloys Ltd (rated 'CRISIL D Issuer Not Cooperating')
set up by Mr. Kanungo in 1998, is also in the same business.
VANI ORGANICS: CARE Keeps C Debt Rating in Not Cooperating
----------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Vani
Organics Private Limited (VOPL) continues to remain in the 'Issuer
Not Cooperating' category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term 6.50 CARE C; ISSUER NOT COOPERATING;
Bank Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated October 18,
2023, placed the rating(s) of VOPL under the 'issuer
non-cooperating' category as VOPL had failed to provide information
for monitoring of the rating as agreed to in its Rating Agreement.
VOPL continues to be non-cooperative despite repeated requests for
submission of information through e-mails dated September 2, 2024,
September 12, 2024, September 22, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Analytical approach: Standalone
Vani Organics Private Limited (VOPL) belongs to Vani Group based
out of Hyderabad promoted by Late Mr. Subba Rao. The Group
commenced its business by incorporating Vani Pharma Labs Limited
(VPL) in the year 1976 which is the flagship company of the group
and engaged in manufacturing of Active Pharmaceutical Ingredients
(APIs) and bulk drugs. In 1984, the group expanded its production
facilities by incorporating VOPL in Bidar, Karnataka, to
manufacture bulk drugs.
VIVIN DRUGS: CRISIL Lowers Long/Short Term Debt Ratings to D
------------------------------------------------------------
CRISIL Ratings has downgraded its ratings on the bank facilities of
VDPL to 'CRISIL D/CRISIL D Issuer Not Cooperating' from 'CRISIL
B+/Stable/CRISIL A4 Issuer Not Cooperating' owing to delay in debt
servicing.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Long Term Rating - CRISIL D (ISSUER NOT
COOPERATING; Downgraded from
'CRISIL B+/Stable ISSUER NOT
COOPERATING')
Short Term Rating - CRISIL D (ISSUER NOT
COOPERATING; Downgraded from
'CRISIL A4 ISSUER NOT
COOPERATING')
CRISIL Ratings has been consistently following up with VDPL for
obtaining information through letters and emails dated November 13,
2023, and November 27, 2024, among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
Investors, lenders and all other market participants should
exercise due caution with reference to the ratings
assigned/reviewed with the suffix 'issuer not cooperating' as the
ratings have been arrived at without any management interaction and
are based on best-available or limited or dated information on the
company. Such noncooperation 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 VDPL. This restricts the ability
of CRISIL Ratings to take a forward-looking view on the credit
quality of the entity. CRISIL Ratings believes that the rating
action on VDPL is consistent with 'Assessing Information Adequacy
Risk'.
Based on the last-available information, CRISIL Ratings has
downgraded its ratings on the bank facilities of VDPL to 'CRISIL
D/CRISIL D Issuer Not Cooperating' from 'CRISIL B+/Stable/CRISIL A4
Issuer Not Cooperating' owing to delay in debt servicing.
Analytical Approach
CRISIL Ratings has evaluated the standalone business and financial
risk profiles of VDPL
Incorporated in 2011, VDPL (formerly known as Eytan Labs Ltd)
manufactures bulk drugs mainly in the antiretroviral segment; it is
based in Hyderabad (Telangana). The promoter, Mr. Parvathaiah
Botta, manages the business.
WHITEFIELDS APPAREL: CARE Keeps D Debt Ratings in Not Cooperating
-----------------------------------------------------------------
CARE Ratings said the rating for the bank facilities of Whitefields
Apparel (WA) continues to remain in the 'Issuer Not Cooperating'
category.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term Bank 9.20 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Short Term Bank 3.35 CARE D; ISSUER NOT COOPERATING
Facilities Rating continues to remain
under ISSUER NOT COOPERATING
category
Rationale and key rating drivers
CARE Ratings Ltd. had, vide its press release dated October 19,
2023, placed the rating(s) of WA under the 'issuer non-cooperating'
category as WA had failed to provide information for monitoring of
the rating as agreed to in its Rating Agreement. WA continues to be
non-cooperative despite repeated requests for submission of
information through e-mails dated September 3, 2024, September 13,
2024, September 23, 2024 among others.
In line with the extant SEBI guidelines, CARE Ratings Ltd. has
reviewed the rating on the basis of the best available information
which however, in CARE Ratings Ltd.'s opinion is not sufficient to
arrive at a fair rating.
Users of this rating (including investors, lenders and the public
at large) are hence requested to exercise caution while using the
above rating(s).
Analytical approach: Standalone
Whitefields Apparel (WA) was established in April 2011 as a
proprietorship concern by Mrs. Kalpana Anand, daughter of Mr. K. P.
Ramasamy, the Chairman of K.P.R. Mill Limited. WA is a
Tirupur-based firm engaged in manufacture and export of knitted
garments.
=========
J A P A N
=========
RAKUTEN GROUP: S&P Rates New Perpetual Subordinated Bonds 'B'
-------------------------------------------------------------
S&P Global Ratings said it has assigned its 'B' issue credit rating
to Japan-based internet services company Rakuten Group Inc.'s
(BB/Stable/--) proposed U.S. dollar-denominated perpetual
subordinated bonds. The proceeds of issuance will be applied to the
refinancing of the series two subordinated bonds worth JPY26
billion and the series four subordinated bonds worth JPY50 billion
that the company had previously issued.
S&P said, "We will assess hybrid securities comprising up to 15% of
the capitalization of Rakuten's nonfinancial unit as having
intermediate equity content as long as the hybrid documentation and
issuer intent are eligible to achieve such an assessment. For
proposed bonds classified as having intermediate equity content, we
will regard 50% as equity and the remaining 50% as debt. We will
reflect this in our adjustment of the company's financial ratios.
"The ratings on the subordinated bonds are three notches lower than
our long-term issuer credit rating on Rakuten. The three-notch
differential reflects our notching methodology, whereby we deduct
two notches for subordination of the bonds and one additional notch
for the issuer's option to defer interest payments. In Rakuten's
case, we incorporate into our ratings on the issuer and its hybrid
bonds the benefits it reaps from its control of financial
subsidiaries with somewhat high credit quality."
This issuance will not affect the issuer credit rating on Rakuten
because all proceeds of bond issuance will be applied to
refinancing of existing subordinated bonds.
S&P said, "Our 'BB' long-term issuer credit rating on Rakuten is
mainly based on our view that the company maintains a leading
position in Japan's e-commerce market, supported by its strong
brand recognition and solid ecosystem, including financial
services. It also incorporates our expectation that the company's
nonfinancial unit will continue to heavily rely on debt, though the
mobile business will likely continue to reduce losses. Stronger
creditworthiness of the financial unit compared with the
nonfinancial unit also underpins our ratings.
"The company's business performance in the third quarter (ended
Sept. 30, 2024) is mostly in line with our assumptions, including
certain improvement in the mobile business.
"We expect the capital and business alliance between Rakuten Card
Co. Ltd. and Mizuho Financial Group Inc. (Mizuho FG), which was
announced on Nov. 13, 2024, to have a somewhat positive impact on
the creditworthiness of Rakuten Group. We understand that the
company's credit card business is the center of its strong
ecosystem across financial and nonfinancial businesses. After
Rakuten transfers 14.99% of shares in Rakuten Card to Mizuho FG,
the company will maintain its control over Rakuten Card and provide
settlement and credit services through the business alliance to
corporate customers and member retailers. This will likely enable
Rakuten to enhance its e-commerce business.
"We estimate the transfer of shares in Rakuten Card could also
likely improve Rakuten's debt-to-EBITDA ratio by about one point in
fiscal 2024 (ending Dec. 31, 2024). If the company applies the
proceeds of the share transfer to improving the finances of the
nonfinancial unit, we would expect the benefits to affect the ratio
of debt to EBITDA.
"We consider that the characteristics of the subordinated
bonds--Rakuten's option to defer interest payments, a sufficiently
long residual time, and subordination in liquidation or bankruptcy
proceedings--meet our standards for deeming them to have
intermediate equity content."
While callable in and after 2029, the bonds will have no legal
maturity. Interest to be paid on the bonds increases 25 basis
points (bps) in year five (2029), then rises a further 75 bps in
year 20 (2044). The second step-up date will be extended to year 25
(2049) if the long-term issuer credit rating on the company is at
any time raised to 'BBB-' or higher. Once that step-up date is
extended, the date cannot revert to 2044. Because S&P considers the
cumulative 100-bps increase a material step-up under its criteria,
S&P believes Rakuten has an incentive to call the bonds on the
dates of their second step-ups.
S&P said, "We consider the dates of the second step-ups the
effective maturity dates because Rakuten has not included
statements on replacement that meet our criteria. As long as our
long-term issuer credit rating on Rakuten is 'BB-' or higher, we
will reclassify the bonds as having no equity content when the
period remaining to effective maturity shortens to less than 15
years, or when the period remaining to extended maturity shortens
to less than 20 years if the long-term issuer credit rating on
Rakuten is raised to 'BBB-' or higher.
"The bonds become callable in 2029. However, even if we reclassify
our assessment of the bonds' equity content, we understand Rakuten
intends to either maintain the subordinated bonds or refinance them
with securities with equivalent or higher equity content except in
the case where the issuer's credit quality improves, and prepayment
would not cause us to take downward actions on our long-term issuer
rating or rating outlook on the company. This is because Rakuten
has indicated it intends to refinance the bonds with hybrid
securities with equivalent or higher equity content if it calls the
bonds. We view Rakuten's plan to issue U.S. dollar-denominated
subordinated bonds to refinance existing subordinated bonds as
supportive of its commitment to replace the hybrids it redeems.
"Rakuten has a somewhat high reliance on hybrid bonds in its
capitalization. However, we will assess hybrid bonds totaling up to
15% of capitalization of Rakuten's nonfinancial unit as having
intermediate equity content mainly for two reasons. First, we
believe the company demonstrates a strong intent to maintain or
replace hybrid capital on its balance sheet for a sufficiently long
period as loss-absorbing capital, especially when under financial
stress. Second, we believe the company has the ability and
sufficient incentive to defer interest payments to protect its
balance sheet regardless of the size of its total hybrid
securities.
"The ratio of total amount of hybrid securities to capitalization
of its nonfinancial unit fell to about 18% as of Dec. 31, 2023,
from about 24% as of Dec. 31, 2021. We expect Rakuten to continue
to control the ratio so that the company will not increase its
reliance on hybrid securities.
"Notwithstanding, if we see material changes in the issuer's intent
and financial policy to maintain its hybrid bonds as loss-absorbing
capital, we may revisit our assessment of their equity content."
SOFTBANK GROUP: Moody's Alters Outlook on 'Ba3' CFR to Positive
---------------------------------------------------------------
Moody's Ratings has affirmed SoftBank Group Corp.'s (SBG) Ba3
corporate family rating as well its Ba3 senior unsecured ratings
and B2 subordinated debt rating, and revised its outlook to
positive from stable.
RATINGS RATIONALE
The outlook change to positive and the affirmation of SBG's Ba3 CFR
reflect the improvement in SBG's credit fundamentals driven by a
decline in leverage. Moody's estimate SBG's market value-based
leverage (MVL) has improved to around 26% as of September 2024 from
around 41% a year earlier. The value of SBG's stake in Arm Holdings
plc (Arm) has considerably increased over the same period, driving
an increase in the value of its total investment portfolio.
Meanwhile, SBG has maintained its net debt within the range of
JPY10 to JPY11 trillion over the last year.
Concurrently, the share of SBG's listed assets – largely
comprising Arm, SoftBank Corp. (SBKK) and T-Mobile US, Inc. (TMUS)
– relative to its total portfolio value has increased to over
70%, enhancing transparency over the asset quality of its
portfolio. Moody's estimate that the value of SBG's listed assets
far exceeded its total debt as of September 2024. On the flip side,
the degree of concentration in the portfolio's largest assets has
increased.
SBG has demonstrated a track record and greater visibility over the
divestment of its stake in Alibaba Group Holding Limited (A1
negative). SBG has consistently deployed its stake in Alibaba to
physically settle its financing under Alibaba prepaid forward
contracts, which Moody's count as debt. SBG plans to settle the
remaining Alibaba forward contracts by June 2025. All else being
equal, unwinding of such forward contracts through physical
settlement will decrease SBG's MVL further.
SBG's Ba3 CFR is supported by its good liquidity at the holding
company level, which is able to cover scheduled debt maturities
over the next two and a half years. These credit strengths are
counterbalanced by its exposure to event risks from large and
unpredictable transactions, which could significantly alter the
value and quality of its investment portfolio, as well as its
capital structure.
In addition, SBG's CFR is constrained by its low interest coverage.
SBG's recurring income still relies primarily on dividends from
SBKK, although dividends from TMUS, which commenced in December
2023, help boost SBG's recurring income and reduce its reliance on
a single source.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The positive rating outlook reflects Moody's view that SBG's MVL
will remain in the mid-to-low-20% range, thereby providing the
company a larger financial cushion to absorb the event risks
associated with its investment strategy and financial policy. The
positive outlook also incorporates Moody's expectation that the
company will maintain good liquidity with its substantial cash
balance.
SBG's CFR could be upgraded if there are improvements in
governance, including maintaining a financial policy that will
allow for the company to build a track record of reducing debt
particularly secured debt and sustaining MVL towards 20%. Greater
visibility over the company's long-term investment strategy,
risk-return profile and asset allocation policy will also add to
upward pressure.
Moody's will consider revising the outlook to stable if SBG fails
to sustain the improvements in its leverage such that MVL increases
towards 30%.
Although a downgrade is unlikely over the next 12-18 months given
the positive outlook, downward rating pressure will arise if the
value, credit quality or transparency of SBG's investee companies
deteriorate. A further decline in the company's ownership of its
dividend-paying subsidiary SBKK without a commensurate increase in
stable dividends from other sources, or a decline in liquid assets,
will also pose downward rating pressures. In addition, Moody's will
consider a downgrade if cash held at the holding company level
diminishes, such that SBG's cash on hand no longer covers two years
of scheduled debt maturities, or if the company's total debt
increases. Downward pressure will also arise if material legal or
other contingent obligations crystallize or governance risks rise
further. The rating of SBG's unsecured debt could be notched down
if its secured debt becomes the clear majority of debt held.
The principal methodology used in these ratings was Investment
Holding Companies and Conglomerates (Japanese) published in April
2023.
Headquartered in Tokyo, SoftBank Group Corp. is a Japanese holding
company with subsidiaries in various businesses, including
telecommunications, semiconductors and other technologies.
===============
M A L A Y S I A
===============
HO HUP: Subsidiary Golden Wave Placed Under Receivership
--------------------------------------------------------
The Malaysian Reserve reports that Golden Wave Sdn Bhd (GWSB), an
indirect subsidiary of Ho Hup Construction Company Bhd, has been
placed under receivership.
In an exchange filing Dec. 5, Ho Hup said that Sabah Development
Bank Bhd (SDB) has appointed a receiver and manager for GWSB on
Dec. 3, The Malaysian Reserve relates.
It said GWSB, in which Ho Hup holds a 52.5% equity interest, was
not a major subsidiary.
It recorded a loss before tax of MYR4.17 million in 2023,
contributing 4.9% to Ho Hup's total losses of MYR85.19 million, the
report discloses. The subsidiary's total assets of MYR396.1 million
represent 32.2% of Ho Hup's total assets.
In the filing, Ho Hup said the appointment, executed under a 2018
debenture, was not expected to have any immediate financial or
operational impact, The Malaysian Reserve relays.
It said the company was challenging the move, claiming it overlaps
with an ongoing court case, and was considering filing an
injunction.
About Ho Hup
Ho Hup Construction Company Berhad --
https://www.hohupgroup.com.my/ -- engages in foundation
engineering, civil engineering, building contracting works and hire
of plant and machinery. The Company operates in four segments:
construction, which is engaged in foundation and civil
engineering, building contracting works and engineering,
procurement, construction and commissioning of pipeline system;
property development, which includes the development of
residential and commercial properties, manufacturing, which
includes manufacturing and distribution of ready-mixed concrete,
and other business segment, which represents hire of plant and
machinery. The Company's subsidiaries include H2Energy Corporation
Sdn Bhd, Tru-Mix Concrete Sdn Bhd, Bukit Jalil Development Sdn Bhd
and Ho Hup Equipment Rental Sdn Bhd.
MMAG HOLDINGS: Proposes Share Capital Reduction to Reduce Losses
----------------------------------------------------------------
John Lai at theedgemalaysia.com reports that ACE Market-listed MMAG
Holdings Bhd has proposed a share capital reduction to wipe out up
to MYR270 million of its accumulated losses.
"The proposed share capital reduction will enable the company and
the group to rationalise their financial positions by reducing the
accumulated losses," the company said in a bourse filing on Dec. 6,
theedgemalaysia.com relays.
At the group level, MMAG's accumulated losses stood at MYR290.2
million at the end of the audited 18 months ended Sept. 30, 2024,
theedgemalaysia.com discloses. This will be reduced to MYR20.37
million after the share capital reduction.
As of Dec. 5, MMAG has an issued share capital of MYR565.22
million, comprising 2.31 billion ordinary shares. Its issued share
capital will drop to MYR295.22 million after the exercise.
MMAG, which is involved in full-fledged integrated supply chain
management, has been loss-making in the past nine financial years,
theedgemalaysia.com notes. Its financial year was recently changed
to Sept. 30, from March 31, for the financial period 2024.
For the 18 months ended Sept. 30, 2024, the group posted a net loss
of MYR95.71 million, which it attributed to business expansion
costs, theedgemalaysia.com discloses. Its revenue for the period
was MYR824.44 million. In the latest July-September quarter, the
group booked a net profit of MYR21.04 million, mainly on stronger
ringgit and the reversal of impairments on recovery of receivables,
it said.
On Nov. 18, MMAG was granted a waiver by Bursa Securities from
being classified as an affected listed company under Guidance Note
3 (GN3) after it improved its financial position through fund
raising exercises, theedgemalaysia.com says. It previously fell
into GN3 status - typically assigned to financially distressed ACE
Market-listed companies - after its shareholder equity fell below
50% of issued share capital in the year ended March 31, 2023
(FY2023).
It raised MYR145.34 million from its six-for-one rights issue at 10
sen per share in January, and MYR92.09 million from warrant
conversion, at 15 sen apiece, from January to September.
At end-June, it was in a net-cash position of MYR52.6 million, not
taking into account lease liabilities of MYR52.62 million.
TA Securities has been appointed as the principal adviser to MMAG
for the proposed share capital reduction, theedgemalaysia.com
adds.
About MMag Holdings
MMag Holdings Berhad is a Malaysia-based integrated supply chain
management company. The Company provides first, mid and last-mile
delivery services in Malaysia and across Asia with full
connectivity by air, sea and land. Its integrated supply chain
management solutions use technology, big data analytics and
strategic partnerships to provide businesses with customized
end-to-end logistics solutions in Malaysia.
=====================
N E W Z E A L A N D
=====================
AVAILABILITY.CO.NZ: Creditors' Proofs of Debt Due on Dec. 28
------------------------------------------------------------
Creditors of Availability.Co.NZ Limited are required to file their
proofs of debt by Dec. 28, 2024, to be included in the company's
dividend distribution.
The company commenced wind-up proceedings on Nov. 28, 2024.
The company's liquidator is:
Gregory Victor Millar
Level 2, 142 Broadway
Newmarket, Auckland
FRANK LEATHEM: Creditors' Proofs of Debt Due on Jan. 27
-------------------------------------------------------
Creditors of Frank Leathem Panelbeating (2009) Limited and Kabayan
Builders Limited are required to file their proofs of debt by Jan.
27, 2025, to be included in the company's dividend distribution.
The companies commenced wind-up proceedings on Dec. 2, 2024.
The company's liquidator is:
Lynda Smart
Rodgers Reidy
PO Box 39090
Harewood, Christchurch 8545
INNOVATIVE ROOFING: Creditors' Proofs of Debt Due on Jan. 2
-----------------------------------------------------------
Creditors of Innovative Roofing Limited are required to file their
proofs of debt by Jan. 2, 2025, to be included in the company's
dividend distribution.
The company commenced wind-up proceedings on Dec. 2, 2024.
The company's liquidators are:
Larissa Logan
Suite 14456
17B Farnham Street
Parnell, Auckland 1052
OAKMONT HOMES: Court to Hear Wind-Up Petition on Feb. 21
--------------------------------------------------------
A petition to wind up the operations of Oakmont Homes Limited will
be heard before the High Court at Auckland on Feb. 21, 2025, at
10:45 a.m.
McCready Stone Trustee Limited filed the petition against the
company on Nov. 13, 2024.
The Petitioner's solicitor is:
John Walters
10 Turakina Street
Grey Lynn, Auckland 1021
TRG NATURAL: Court to Hear Wind-Up Petition on Dec. 18
------------------------------------------------------
A petition to wind up the operations of TRG Natural Pharmaceuticals
Limited will be heard before the High Court at Auckland on Dec. 18,
2024, at 10:45 a.m.
Shaun Lister Holt filed the petition against the company on Oct. 8,
2024.
The Petitioner's solicitor is:
P. J. Anderson
C/- Cooney Lees Morgan
ANZ Centre, Level 3
247 Cameron Road (PO Box 143)
Tauranga 3140
===============
P A K I S T A N
===============
PAKISTAN INT'L AIRPORT: To Resume Flights to Europe on Jan. 10
--------------------------------------------------------------
Reuters reports that Pakistan International Airlines said on Dec. 6
it will resume flights to Europe in January, starting with Paris,
after the EU aviation regulator lifted a ban on the national flag
carrier.
PIA's authorisation to operate in the EU was suspended in June 2020
over concerns about the ability of Pakistani authorities and its
Civil Aviation Authority to ensure compliance with international
aviation standards, according to Reuters.
"We have got approval for the first flight's schedule we had
filed," Reuters quotes PIA spokesperson Abdullah Hafeez Khan as
saying, adding that the airline would be opening bookings on
Dec. 9 for its planned Jan. 10 flight of a Boeing 777 to Paris.
Reuters notes tht the European Union Aviation Safety Agency and
Britain suspended PIA's permission to operate in the region after
Pakistan began probing a scandal over the validity of pilots'
licences in the wake of a plane crash that killed 97 people.
Pakistan's attempt to privatise PIA fell flat when it received only
a single offer, well below its asking price.
PIA will soon approach Britain's Department for Transport (DfT) for
permission to resume routes to the UK, Khan said.
Once cleared by the DfT, London, Manchester and Birmingham would be
the most sought-after destinations, he added, Reuters relays.
The ban cost the loss-making airline PKR40 billion (US$144 million)
annually in revenue, Reuters notes.
PIA has 23% of Pakistan's domestic aviation market, but its
34-plane fleet cannot compete with Middle Eastern carriers which
have 60%, due to a lack of direct flights, despite having
agreements with 87 countries and key landing slots.
About PIA
Pakistan International Airlines Corp Ltd (PIA) provides commercial
air transportation services. It includes passenger, cargo postal
carriage, engineering, and other services. Pakistan International
Airlines (PIA) is the flag carrier of Pakistan and wholly owned by
the government of Pakistan.
As reported in the Troubled Company Reporter-Asia Pacific on April
4, 2024, Pakistan is putting on the block a stake ranging from 51%
to 100% of loss-making national carrier Pakistan
International Airlines, the privatisation panel said on April 2, as
part of reforms urged by the International Monetary Fund (IMF).
Reuters said the disposal of the flag carrier is a step past
elected governments have steered away from as likely to be highly
unpopular, but progress on the privatisation will help
cash-strapped Pakistan pursue further funding talks with the IMF.
In October 2023, a body under Pakistan's cabinet used emergency
powers to hire financial advisers to plan the privatization of
Pakistan International Airlines.
Pakistan International Airlines has reported a loss of over PKR75
billion for the year 2023. The total liabilities of the airline
have ballooned to PKR825 billion while total assets are valued at
PKR161 billion, according to Pakistan Today.
=====================
P H I L I P P I N E S
=====================
MJC INVESTMENTS: To Convert PHP2.4B in Deposits to Fix Deficit
--------------------------------------------------------------
Jenniffer B. Austria at Manila Standard reports that MJC
Investments Corp. (MJIC) is aiming reported fix its capital deficit
by converting PHP2.43 billion in deposits from shareholders into
equity.
Based on the updated business plan submitted to the Philippine
Stock Exchange MJIC said it intends to bring its stockholders
equity from negative to positive by creating additional paid-in
capital (APIC) using the PHP2.42 billion advances from 18 existing
shareholders, Manila Standard relates.
According to Manila Standard, MJIC said participating stockholders
expressed willingness to convert the stockholders advances into
APIC without issuance of new shares to cure the company's negative
equity position which stands at PHP2.27 billion as of end September
2024.
"The path to pursue the creation of APIC without issuance of news
shares instead of converting the stockholders advances into equity
via private placement was adopted to achieve the objective of
wiping out the capital deficit of the corporation sooner without
diluting the minority," MJIC said.
The proposed creation of APIC will be presented to shareholders for
approval in January 2025.
Meanwhile, MJIC also reported that its external auditors are
finalizing the 2022 and 2023 audited financial statements of the
company.
MJC Investments Corp. is a holding company, which engages in the
tourism and entertainment industry. It operates through the Gaming
and Non-Gaming segments. The Gaming segment is involved in the
casino operations. The Non-gaming segment refers to hotel
operations. The company was founded on July 15, 1955 and is
headquartered in Manila, Philippines.
=================
S I N G A P O R E
=================
BLOSSOMSFOOD PTE: Court to Hear Wind-Up Petition on Dec. 20
-----------------------------------------------------------
A petition to wind up the operations of Blossomsfood Pte. Ltd. will
be heard before the High Court of Singapore on Dec. 20, 2024, at
10:00 a.m.
Maybank Singapore Limited filed the petition against the company on
Nov. 28, 2024.
The Petitioner's solicitors are:
Adsan Law LLC
300 Beach Road
#26-00 The Concourse
Singapore 199555
DNS ASIA: Creditors' Proofs of Debt Due on Jan. 6
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Creditors of DNS Asia Investment Pte. Ltd. are required to file
their proofs of debt by Jan. 6, 2025, to be included in the
company's dividend distribution.
The company commenced wind-up proceedings on Nov. 29, 2024.
The company's liquidators are:
Toh Ai Ling
Chan Kwong Shing, Adrian
Tan Yen Chiaw
c/o 12 Marina View #15-01
Asia Square Tower 2
Singapore 018961
FONBELL SOLUTION: Court to Hear Wind-Up Petition on Dec. 20
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A petition to wind up the operations of Fonbell Solution Pte. Ltd.
will be heard before the High Court of Singapore on Dec. 20, 2024,
at 10:00 a.m.
GC Lease Singapore Pte Ltd filed the petition against the company
on Nov. 27, 2024.
The Petitioner's solicitors are:
I.N.C. Law LLC
4 Battery Road
#26-01, Bank of China Building
Singapore 049908
IDEAL DESIGN: Court Enters Wind-Up Order
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The High Court of Singapore entered an order on Nov. 29, 2024, to
wind up the operations of Ideal Design Interior 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
OSTARA CHINA: Creditors' Proofs of Debt Due on Jan. 6
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Creditors of Ostara China Investments 1 (Singapore) Pte. Limited
are required to file their proofs of debt by Jan. 6, 2025, to be
included in the company's dividend distribution.
The company commenced wind-up proceedings on Nov. 26, 2024.
The company's liquidator is:
Chek Khai Juat
c/o Tricor Singapore Pte. Ltd.
9 Raffles Place
#26-01 Republic Plaza
Singapore 048619
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S R I L A N K A
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SRI LANKA: Moody's Puts 'Ca' Issuer Rating on Review for Upgrade
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Moody's Ratings has placed the Government of Sri Lanka's Ca
long-term foreign currency issuer rating on review for upgrade.
Previously, the outlook was stable.
Concurrently, Moody's have assigned (P)Caa1 foreign currency senior
unsecured ratings to Sri Lanka's new USD-denominated issuances in
its exchange offer, specifically the macro-linked bonds (MLBs), the
governance-linked bond (GLB), as well as the step-up and past-due
interest (PDI) bonds.
The existing Ca ratings on Sri Lanka's foreign currency senior
unsecured debt issuances that are in default and will be exchanged
for the new debt issuances reflect the expected financial loss and
are unchanged.
The decision to place the issuer rating on review for upgrade
reflects the announcement of the exchange offer by the government,
which if successful will conclude the restructuring of its
international bonds held by private-sector creditors and reduce the
default risk on new and future issuances. In particular, the
relatively comprehensive debt restructuring and ongoing reforms
under the government's programmes with development partners
including the International Monetary Fund (IMF) are leading to a
significant reduction in external vulnerability and government
liquidity risk, while raising prospects for fiscal and debt
sustainability, albeit from a weak starting point. Willingness and
capacity to implement reforms speak to Sri Lanka's governance, a
driver of this rating action.
The government has been in default since April 2022, when it
announced that it would suspend the servicing of external debt
repayments.
The review period is expected to last until the exchange offer
period closes and there is clarity on the outcome of the
restructuring of international bonds.
The assignment of the (P)Caa1 ratings to Sri Lanka's new foreign
currency issuances reflects Moody's assessment that, according to
the terms and conditions of the exchange offer, the issuances
constitute direct, unconditional and unsecured obligations of the
government and will rank pari passu among themselves and equally
with all of the government's other unsecured and unsubordinated
obligations. The provisional rating takes into account Moody's
assessment that debt restructuring will provide material debt and
repayment relief, as well as Sri Lanka's relatively solid growth
prospects and the return of reform appetite that is gradually
restoring policy credibility and effectiveness. These credit
supports are balanced against Moody's expectation that the
government's debt affordability will remain very weak and its debt
burden high compared to peers.
The payments for the MLBs are contingent on GDP outcomes, including
potential changes to the principal value ranging from -21% to 22%
relative to the notional amount exchanged in the offer. The
payments depend on a point-in-time comparison of realised GDP
outcomes published by the IMF against the IMF's currently published
baseline scenario of projected GDP outcomes. In rating these debt
instruments, Moody's do not assess the likelihood of any of the GDP
outcomes determining the payments. Once the point-in-time
comparison is conducted and any adjustments to contractual
obligations are made, there will be no other source of variation to
debt payments.
Sri Lanka's local and foreign currency country ceilings remain
unchanged at Caa1 and Ca, respectively. The three-notch gap between
the local currency ceiling and the sovereign rating balances a
contained government footprint, against still relatively limited
but increasing foreign exchange buffers that confer macroeconomic
risks, as well as a domestic political environment that has weighed
on policymaking. The three-notch gap between the foreign currency
ceiling and local currency ceiling takes into consideration the
high level of external indebtedness and still low, albeit rising,
level of foreign exchange buffers.
A List of Affected Credit Ratings is available at
https://urlcurt.com/u?l=82nqKm
RATINGS RATIONALE
RATIONALE FOR INITIATING THE REVIEW FOR UPGRADE ON THE ISSUER
RATING
Sri Lanka's government announced an exchange offer for its
outstanding international bonds on November 25, 2024. The
announcement follows the agreement the government had reached with
representative groups of holders of its international bonds
comprising both foreign and domestic investors in September 2024,
and approvals from the IMF and representatives of bilateral
official sector creditors on compliance with the country's IMF
programme targets and comparability of debt treatment. A successful
exchange will conclude the government's restructuring of its
international bonds and reduce the default risk on new and future
issuances.
Prior to the announcement, Sri Lanka had already reached agreements
with its main bilateral creditors, which include Paris Club members
and India (together the Official Creditor Committee) as well as
China, and China Development Bank. The agreements have either come
into effect or will be in the coming weeks.
The government also restructured part of its domestic debt over
July to September 2023 in its Domestic Debt Optimisation (DDO)
initiative. The DDO covered the local currency debt held by the
Central Bank of Sri Lanka (CBSL) and superannuation funds, as well
as the USD-denominated Sri Lanka Development Bonds (SLDBs) and
Foreign Currency Banking Units (FCBUs) held by domestic investors
including banks.
Sri Lanka's credit fundamentals have improved over the past two
years, aided by effective policy adjustments that have led to a
stabilisation of the macroeconomic environment, as well as debt
restructuring and ongoing reforms under the government's programmes
with the IMF and other development partners. External vulnerability
and government liquidity risk have both declined from elevated
levels. The restructuring has also had a limited impact on the
banking sector, reflecting Sri Lanka's wider domestic investor base
compared to peers.
Foreign exchange reserves have quadrupled since the default as
sizeable financing inflows from development partners, the
suspension of external debt repayments to bilateral and commercial
creditors, an improvement in current account dynamics, as well as
substantial purchases of foreign exchange by CBSL have helped Sri
Lanka rebuild its foreign exchange buffers. As of the end of
October 2024, foreign exchange reserves had risen to nearly $6.4
billion, up from $1.6 billion in April 2022 and sufficient to cover
around 3.5 months of imports. Moody's project that foreign exchange
reserves will rise to cover more than 4 months of imports and all
of the country's external debt due by the end of 2025 and over the
following 2-3 years. At the same time, the external repayment
profile will remain benign at less than 2% of GDP annually over the
next few years even as debt repayments fully resume
post-restructuring, and Moody's expect the government's gross
financing needs to fall to average around 15% of GDP.
Besides the reduction in liquidity risks, Sri Lanka's fiscal and
debt dynamics are also improving, albeit from a weak starting
point. Moody's expect Sri Lanka's fiscal deficit to narrow to 5-6%
of GDP in 2025-26, compared to Moody's estimate of 7% of GDP for
2024 and an average deficit of 11% of GDP in 2021-22 around the
time of the default. The reduction in the deficit has been driven
by revenue measures that significantly widened the government's
revenue base from 8.3% of GDP in 2021-22 to Moody's estimate of
around 14% of GDP in 2024. These revenue measures include raising
the value added tax and corporate income tax rates, lowering the
personal income tax free allowance, and strengthening tax
administration.
Although the change in president and government point to underlying
social challenges that may make further fiscal consolidation
difficult, initial announcements suggest that the new
administration is committed to structural reforms and the IMF
programme. Some reprioritisation of reform measures and targets is
likely, but Moody's expect the broad reform trajectory to remain
intact.
The widening of the revenue base is supporting a substantial
improvement in debt affordability for Sri Lanka, although Moody's
expect interest payments will continue to absorb a very high level
of around 40-50% of government revenue into the foreseeable future.
Sri Lanka's debt affordability will remain among the weakest across
sovereigns Moody's rate and constrains its credit profile.
Likewise, while Moody's expect Sri Lanka's debt burden to decline
to around 95% of GDP by the end of this year after the
restructuring of international bonds, and to below 90% within the
next 2-3 years from a peak of 114% at the end of 2022, the debt
burden will remain high compared to peers.
This combination of improvements in Sri Lanka's credit profile and
ongoing credit constraints is likely to be consistent with a Caa1
rating.
RATIONALE FOR ASSIGNING THE PROVISONAL (P)Caa1 RATINGS ON THE NEW
ISSUANCES IN THE DEBT RESTRUCTURING
Successful restructuring of the international bonds will likely
lead to credit fundamentals consistent with a Caa1 rating as
described above.
The terms and conditions of the exchange offer indicate that the
new issuances will constitute direct, unconditional and unsecured
obligations of the government, and will rank pari passu among
themselves and equally with all of the government's other unsecured
and unsubordinated obligations of the government.
The notes that Moody's have assigned (P)Caa1 ratings to are the
USD-denominated MLBs, GLB, as well as the step-up and PDI bonds.
The MLBs will vary in payment based on a point-in-time comparison
of GDP outcomes to be conducted by November 2028, affecting both
coupon payments and principal repayments from 2028. In particular,
the principal value will range between 79% and 122% of the notional
amount exchanged in the offer depending on realised GDP outcomes as
published by the IMF compared to the IMF's currently published
baseline projections. Importantly, once the point-in-time
comparison is conducted and any adjustments to contractual
obligations are made, there will be no other source of variation to
debt payments. Also, any revisions to GDP outcomes at a later date
will not impact the payments determined by the point-in-time
comparison. The GLB does not involve any changes to the principal
value compared to the notional amount exchanged in the offer, but
has a step-down feature in coupon payments from December 2028 if
key performing indicators and data disclosure requirements are met.
In rating the MLBs and GLB, Moody's do not assess the likelihood of
any of the GDP outcomes or criteria determining the payments.
Moody's ratings reflect Moody's assessment of Sri Lanka's ability
and willingness to meet its contractual obligations.
ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
Sri Lanka's ESG credit impact score (CIS-4) indicates that the
rating is lower than it would have been if ESG risk exposures did
not exist. This reflects weak governance that leads to very low
resilience to environmental and social risks.
Sri Lanka's exposure to environment risk (E-4 issuer profile score)
is driven mainly by its physical climate vulnerability. Variations
in the seasonal monsoon can have marked effects on rural household
incomes and real GDP growth: while the agricultural sector
comprises only around 8% of the total economy, it employs more than
a quarter of Sri Lanka's total labour force. Natural disasters
including droughts, flash floods and tropical cyclones that the
country is exposed to also contribute to higher food inflation and
import demand. Moreover, ongoing development projects to improve
urban connectivity have increased the rate of deforestation,
although the country continues to engage development partners to
preserve its natural capital, such as its mangroves.
The exposure to social risk (S-4 issuer profile score) reflects the
constraints the government will face in delivering high-quality
social services and developing critical infrastructure as the
population continues to grow, given its still relatively narrow
revenue base. Moody's assessment also balances Sri Lanka's
relatively good access to basic education, which has continued to
improve throughout the country in the post-civil war period,
against weaknesses in the provision of some basic services in more
remote and rural areas, such as water, sanitation and housing.
The weak governance profile (G-4 issuer profile score) reflects
challenges in policymaking that led to a deterioration in the
government's credit fundamentals and debt default, although the
return of reform appetite and implementation of credit supportive
measures is helping to restore some policy credibility. Domestic
political developments also tend to weigh on fiscal and economic
policymaking. International surveys continue to point to aspects of
governance that are stronger in Sri Lanka relative to rating peers,
including in judicial independence and control of corruption.
GDP per capita (PPP basis, US$): 14,455 (also known as Per Capita
Income)
Real GDP growth (% change): -2.3% (2023) (also known as GDP
Growth)
Inflation Rate (CPI, % change Dec/Dec): 4.2% (2023)
Gen. Gov. Financial Balance/GDP: -8.3% (2023) (also known as Fiscal
Balance)
Current Account Balance/GDP: 1.8% (2023) (also known as External
Balance)
External debt/GDP: 65% (2023)
Economic resiliency: ba3
Default history: At least one default event (on bonds and/or loans)
has been recorded since 1983.
On November 25, 2024, a rating committee was called to discuss the
rating of the Sri Lanka, Government of. The main points raised
during the discussion were: The issuer's economic fundamentals,
including its economic strength, have not materially changed. The
issuer's institutions and governance strength, have materially
increased. The issuer's fiscal or financial strength, including its
debt profile, has not materially changed. The issuer has become
less susceptible to event risks. ESG (Governance) was a key driver
of this rating action.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Moody's would conclude the review period by likely upgrading Sri
Lanka's issuer rating to Caa1 if the exchange offer is successful.
Given the review for upgrade, a downgrade of Sri Lanka's ratings is
remote.
The principal methodology used in these ratings was Sovereigns
published in November 2022.
The weighting of all rating factors is described in the methodology
used in this credit rating action, if applicable.
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S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Asia Pacific is a daily newsletter co-
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2024. All rights reserved. ISSN: 1520-9482.
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