Bangkok--Aug 31--Fitch Ratings
Fitch Ratings (Thailand) Limited has today affirmed the ‘AAA(tha)’ Long-term National rating of a series of guaranteed bills of exchange (“B/E”) due 2005 issued by Siam MCT Telecom Limited (“SMCT”). The National rating reflects the full, irrevocable and unconditional guarantee provided by Mitsubishi Corporation (“Mitsubishi”), which currently has an ‘A’ Long-term Senior Unsecured rating and a ‘F1’ Short-term rating, with a Stable Outlook on the international rating scale. Mitsubishi’s rating is equivalent to the Kingdom of Thailand’s ‘A’ Long-term International local currency rating, with a Stable Outlook. Consequently, the National ratings of the guaranteed B/E are the same as those of the Thai sovereign. Any rating divergence may affect the issue’s National ratings.
Mitsubishi ranks as Japan’s largest general trading company by gross trading profits, net profits and assets. Mitsubishi’s ratings reflect its position as a leading general trading company with the best operating performance among its peers and its solid financial profile, which includes the highest profitability and lowest financial leverage among them. The sector’s strong fundamentals, combined with Mitsubishi’s efforts to reallocate assets and enhance profitability, support its robust operating results, which, in turn, have strengthened its financial profile. The company reported a record high profit with historically low leverage for FYE05.
Broad rating concerns centre on Mitsubishi’s increasing investment risk as a result of the company’s ambitious investment plan and the effective implementation of its investment criteria, the latter of which is highlighted by its support for Mitsubishi Motor Corporation (“MMC”). Mitsubishi’s high exposure to energy and natural resources also points to its potential vulnerability to price volatility in both of these sectors. Fitch’s assessment of the growing difficulty of major general trading companies including Mitsubishi in managing their expanding investment portfolios has led the agency to take a more cautious view of Mitsubishi’s overall credit profile. Fitch also considers that a successful turnaround of MMC and a proven track record of implementing disciplined investment criteria are key positive rating triggers for Mitsubishi.
SMCT is wholly-owned by Mitsubishi and its subsidiary. Incorporated in May 2002, the company was set up to provide a back-to-back lease contract to TOT Corporation Plc (“TOT”) under the telephone network expansion project using the wireless local loop system. The project was mainly funded by debt, including the issuance of B/E and loans from commercial banks, all guaranteed by Mitsubishi. In 2004, SMCT reported a significant net loss mainly due to high administrative expenses as well as extraordinary losses. As most of its existing debt will become due in 2005, SMCT is in the process of seeking refinancing options including parent company loans and/or a further equity injection from Mitsubishi as well as new bank loans. The ratings on the B/E are entirely based on the guarantee mentioned above.
Contact: Orawan Karoonkornsakul, Vincent Milton; Bangkok, Tel: +662 655 4755.
Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with sub- or low-investment grade international sovereign 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.
Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch’s code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the ‘Code of Conduct’ section of this site. The issuer did not participate in the rating process other than through the medium of its public disclosure. End.