Bangkok--Sep 29--Fitch Ratings (Thailand)
Fitch Ratings (Thailand) Limited has today affirmed its Long-term National rating of ‘AA+(tha)’ on DaimlerChrysler (Thailand) Limited’s (“DCT”) THB3.0 billion guaranteed debentures. The Outlook on the rating is Stable. The rating is based entirely on the full, irrevocable and unconditional guarantee on the debentures by DaimlerChrysler AG (“DCX”, international Long-term foreign currency rated at ‘BBB+’ with Positive Outlook). Fitch believes that DCX will provide support to ensure full and timely payment to the holders of the guaranteed debentures issued by DCT in Thailand.
The international ‘BBB+’ rating for DCX is currently one notch below Thailand’s international local currency rating of ‘A-’ (A minus) Positive Outlook. Hence, the National rating of the guaranteed bonds is one rating level below Thailand’s sovereign National rating of ‘AAA(tha)’.
DCX’s rating reflects the group’s leading position as a manufacturer in the premium segment of the global automotive market and in the commercial vehicle market, and the credit profile of Chrysler Group (“CG”). The Positive Outlook indicates Fitch’s view that the restructuring of CG in particular, but also of the commercial vehicle division (“CVD”) has lowered the downside risk provided by these entities. DCX is the fifth largest automotive manufacturer in the world, supplying both the premium and the volume segments, and the largest manufacturer of commercial vehicles.
A high profit contribution from the Mercedes-Benz division and the stable underlying profitability of the Financial Services division has continued to support DCX’s financial profile, although they were partly offset by the impairment for the investment in the European Aeronautic and Space Company and losses at the associates Mitsubishi Motors Company and the tolling joint venture Toll Collect. Cash surpluses were used to pay down group debt while exchange rate movements have lowered the book value of the company’s USD-denominated debt. Industrial leverage improved further and reflects DCX’s net cash position, while EBITDA-based gross interest coverage fell to 7.9x. In 1Q04, DCX reported an increased operating profitability and cash generation, largely as a result of the improved underlying performance at CG and CVD.
DCT is 99.99% owned by DCX. DCT is responsible for the import and wholesale functions for Mercedes-Benz vehicles and Chrysler automobiles (after the merger of Daimler-Benz and Chrysler Group in 1998) for distribution in Thailand. Mercedes-Benz is well-recognised in the premium segment in Thailand, with its relatively low after-sales service costs and the high value of its products in the second-hand market. Mercedes-Benz has maintained its leading position in the premium car segment for several decades. In addition, DCT provides hire purchase and leasing services through its 99.99% leasing subsidiary, DaimlerChrysler Leasing (Thailand) Company Limited.
Full rating reports on DaimlerChrysler (Thailand) Limited and DaimlerChrysler AG are available on the agency’s subscriber website at www.fitchresearch.com
Contact: Lertchai Kochareonrattanakul, +662 655 4760, Tanawat Roongtanapirom, CFA, +662 655 4748, Vincent Milton, Bangkok, +662 655 4759; Wolfgang Wiehe, London, +44 20 7417 4233.
Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable. End.
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