Bangkok--17 Apr--Fitch Ratings
Fitch Ratings (Thailand) Limited has affirmed Noble Group Limited’s (Noble; BBB-/Stable) THB2.85bn guaranteed bonds due 2016 at National Long-Term ‘AAA(tha)’. The bonds, which are guaranteed by Credit Guarantee and Investment Facility (CGIF), have a Stable Outlook.
Key Rating Drivers
Guarantee from CGIF: The rating on the bonds reflects the unconditional and irrevocable guarantee provided by CGIF for the bond’s scheduled payments of interest and principal. In Fitch’s view CGIF’s credit profile is stronger than Thailand’s Long-Term Local Currency Issuer Default Rating of ‘A-’, which is equivalent to ‘AAA(tha)’ on the National Rating scale. The bonds are, therefore, rated at ‘AAA(tha)’.
Established as a trust fund of the Asian Development Bank (ADB) in November 2010, CGIF provides financial guarantee insurance to corporate bonds issued in the Association of Southeast Asian Nations (ASEAN), plus Japan, China and Korea, to protect investors against default. CGIF’s capital contributors include the ASEAN members as well as the ADB, China, Japan and Korea.
Risk from Bond Payment Acceleration: The bondholders’ representative may demand payment under the guarantee only if there is a non-payment event. The bondholders’ representative has the right to accelerate the bond payments against the issuer if there is any event of default. However, if the bondholders’ representative exercises this right, CGIF will no longer be obligated to make payments under the guarantee.
Currency Risk: Bondholders may not receive payment in Thai baht under the guarantee, if CGIF determines that it is impossible or impracticable or that it is unable on commercially reasonable terms and in accordance with its policy to obtain Thai baht to fund the bond payment. In this event, CGIF may make the payment with an equivalent amount of US dollars.
Rating Sensitivities
Negative: Future developments that may, individually or collectively, lead to negative rating
action include:
- deterioration in CGIF’s credit profile relative to Thailand’s Long-Term Local Currency IDR
Positive: No positive action is expected as the rating is at the highest end of the National Ratings scale
For more information on Noble’s ratings, see “Fitch Affirms Noble Group at 'BBB-', Outlook Stable”, dated 4 November 2013, available at www.fitchratings.com.