Bangkok--12 Feb--Fitch Ratings
Fitch Ratings (Thailand) Limited has affirmed Holcim Capital (Thailand) Ltd.’s (HCT) THB1.22bn guaranteed debentures due 2015 at the National Long-Term Rating of ‘AA-(tha)’. The Outlook is Stable.
KEY RATING DRIVERS
Guaranteed by Parent: The National Long-Term Rating on HCT’s debentures is based entirely on an irrevocable and unconditional guarantee provided by Switzerland’s Holcim Ltd (Holcim; BBB/Stable). Holcim’s Long-Term Foreign-Currency Issuer Default Rating (IDR) is two notches below Thailand’s ‘A-’ Long-Term Local-Currency IDR, which correlates with ‘AA-(tha)’ on the Thai National Rating scale.
Financing Vehicle: HCT provides financial support to Holcim’s affiliated companies in Thailand by investing in debentures issued by Thai Roc-Cem Ltd., which holds 27.5% of Siam City Cement Public Company Limited (SCCC, A(tha)/Stable) – Thailand’s second-largest cement producer. HCT’s shareholders are Thai Roc-Cem Ltd. (51%) and Holderfin B.V. Netherlands (49%). Thai Roc-Cem Ltd. is 100%-owned by Holcim Participations (Thailand) Ltd., a 100%-owned subsidiary of Holderfin B.V., which is in turn wholly owned by Holcim.
Holcim Group’s Worldwide Presence: Holcim group has a strong global market position in cement, aggregates and concrete. There is wide geographical diversification, with a presence in more than 70 countries and a balanced mix between developed and emerging markets.
RATING SENSITIVITY
Any changes in the International Rating differential between Holcim and the Thai sovereign rating may affect the debentures’ National Rating. A one-notch change in the International Rating could also result in a change of more than one notch in the National Rating.
Holcim's rating sensitivities were outlined by Fitch in its Rating Action Commentary titled 'Fitch Affirms Holcim at 'BBB'; Outlook Stable' of 5 February 2015.
Future developments that could lead to positive rating actions of Holcim include:
- Funds from operations (FFO) adjusted gross leverage improving to below 2.5x and net leverage below 2.0x. Adjusted gross and net leverage is calculated by pro-rata consolidation of the Indian controlled subsidiaries
- Consolidated FFO adjusted gross leverage below 3.0x
- Consolidated free cash flow (FCF) materially positive
Future developments that could lead to negative rating action of Holcim include:
- EBIT margin, pro-rata consolidated for the Indian subsidiaries, below 10%
- FFO adjusted gross leverage above 3.5x and net leverage above 3.0x, pro-rata consolidated for the Indian controlled subsidiaries
- Consolidated FFO adjusted gross leverage above 4.0x
- Consolidated FCF to remaining neutral to negative