Bangkok--28 Jan--Fitch Ratings
Fitch Ratings (Thailand) Limited says in a performance report that the ‘AAAsf(tha)’ ratings on DAD SPV Company Limited’s (DAD SPV) bonds reflect the cash-flow stability of the underlying transaction.
The transaction is a CMBS backed by 30-year lease and fee payments from the Chaeng Wattana Government Complex in northern Bangkok, which was developed and is managed by the Ministry of Finance’s wholly owned Dhanarak Asset Development Company Limited (DAD).
The ratings were affirmed on 5 November 2013, and reflect irrevocable and unconditional lease payments from the Treasury Department of the Ministry of Finance. The Treasury Department is the sole obligor under the lease agreements with DAD. As DAD SPV’s cash flows are predominantly derived from the lease payments, the transaction is linked to the creditworthiness of the Treasury Department. Based on scheduled annual lease payments, Fitch expects that the transaction will be able to maintain a debt service coverage ratio of at least 1.0x and withstand a refinancing rate higher than the agency’s assumption of 15%. The transaction is also supported by long-term swaps, general and liquidity reserves, and a liquidity facility from state-owned Krung Thai Bank (AA+(tha)/Stable/F1+(tha)).
Lease payments by the Treasury Department come from a budget appropriation each year. Although the transaction is subject to potential delays in the government’s budget appropriation process, government units may use the prior-year’s appropriated amount as a benchmark. This was the case for lease payments in October 2013, which were based on the amount paid in 2012. Lease payments have been made as scheduled since the first payments in July 2008.
Political instability in Thailand is not expected to affect the transaction’s performance in the near term. This, however, will continue to be monitored prior to the next lease-payment date in October 2014.
The performance report is available at www.fitchratings.com or by clicking on the link above.