Bangkok--21 Dec--Fitch Ratings
Fitch Ratings has today affirmed Finspace S.A.'s (Finspace) Long-term foreign currency Issuer Default Rating (IDR) at 'B+', revised its Outlook to Stable from Positive, and simultaneously withdrawn the rating. Fitch will no longer provide ratings or analytical coverage of Finspace as it does not expect to receive the information necessary for maintaining the rating.
The Outlook revision reflects Finspace's change in its refinancing plan, which results in higher exposure to short-term debt and debt repayment over the next three years. As a result, the company is now more vulnerable to refinancing and liquidity risk, although the agency notes that Finspace has a plan to partially refinance its subsidiaries' short-term debt with long-term loans.
Finspace's rating at the time of withdrawal reflects its well-established position and long track record in the customised piping and fittings market, its global customer base, the high quality and wide range of its products and services, and its geographical revenue diversification. The rating also takes into account the good prospects for its major offtake industry, namely oil and gas. Risks to its margins, from raw material price volatility, are minimised as its products are made-to-order.
The rating is constrained by Finspace's high financial leverage, a result of heavy debt-funded capex through 2011. It is not expected to deleverage until its new plate mill begins operations in 2012. Furthermore, apart from its exposure to the cyclical energy sector, the company is exposed to some currency mismatch between its operating cash flows and debt-servicing needs.