Bangkok--23 Apr--Fitch Ratings
Fitch Ratings (Thailand) Limited has downgraded the National Long-Term rating of Ek-Chai Distribution System Company Limited’s (ECDS) debentures due 2015 to ‘AA+(tha)’ from ‘AAA(tha)’. The Outlook is revised to ‘Stable’ from ‘Negative’.
The downgrade follows the agency’s downgrade of Tesco PLC’s (Tesco) Long-Term Issuer Default Rating (IDR) to ‘BBB+’ from ‘A-’ with a Stable Outlook. For further details, please see the commentary entitled ‘Fitch Downgrades Tesco to ‘BBB+’; Stable Outlook’, available on the agency’s subscriber website, www.fitchratings.com.
Key Rating Drivers
Guarantee from Tesco: The rating of ECDS’s guaranteed debentures is based on the full and irrevocable guarantee provided by Tesco, a majority shareholder of ECDS.
Limitation on Sovereign Intervention: Tesco would not be liable to pay this guarantee in case of 1) expropriation or nationalisation of 10% or THB5bn or more, of the issuer’s consolidated fixed assets, or with effect of preventing the issuer and its subsidiaries from pursuing their ordinary course of business; or 2) sovereign intervention preventing the issuer transferring monies or converting foreign currency to pay the obligation under the debentures, or causing Tesco to lose its status as the majority or controlling shareholder.
Rating Sensitivities
Positive: Future developments that may, individually or collectively, lead to positive rating
action include:
- An upgrade of Tesco’s rating.
Negative: Future developments that may, individually or collectively, lead to negative rating
action include:
- A downgrade of Tesco’s rating.
It should be noted that a one-notch change in an International rating could result in a change in a National Rating of more than one notch.