Bangkok--3 Jul--Fitch Ratings
Fitch Ratings (Thailand) Limited has today assigned an expected National Long-term rating of ‘AAA(tha)’ to the upcoming THB2.0 billion guaranteed debentures due in 2009 to be issued by Tri Petch Isuzu Sales Company Limited (“TIS”). The rating is based entirely on the full, irrevocable and unconditional guarantee by its parent, Mitsubishi Corporation (“MC”, rated Long-term foreign currency Issuer Default ‘A’, Outlook Positive). At the same time, the agency has affirmed the National Long-term rating of ‘AAA(tha)’ on TIS’s THB1.0 billion guaranteed debentures due 2008, which are fully, irrevocably and unconditionally guaranteed by MC, and TIS’s THB3.5bn amortising and guaranteed debentures due in 2008, which are fully, irrevocably and unconditionally guaranteed by MC and irrevocably and unconditionally principal guaranteed by Japan Bank for International Cooperation (“JBIC”).
For the new bond issue, as MC’s rating is at the same level of Thailand sovereign rating (rated Long-term Local Currency Issuer Default ‘A’, Outlook Stable), the guaranteed debentures are rated at the same level as Thailand’s sovereign National rating of ‘AAA(tha)’. Fitch says that any changes in the International rating differential between MC and the Thai sovereign will affect the debentures’ National rating. The expected rating is contingent upon receipt of final documents conforming to information already received.
The ratings of MC reflect its leading position in the general trading company sector with the best operating performance among its peers and its solid financial profile, which includes the highest profitability and lowest financial leverage among general trading companies. MC recently announced strong earnings performance in the fiscal year ending March 2006 with net profits almost doubling from the previous year. It also reported record high profitability (ROE of 18.0%) and low leverage (net debt/equity of 1.3x). However, broad rating concerns centre on the rising investment risk as a result of MC’s ambitious investment plan and the effective implementation of its investment criteria, the latter of which is highlighted by its support to Mitsubishi Motors Corporation. The ratings also reflect its high exposure to energy and natural resources, which points to its potential vulnerability to price volatility. The Positive Outlook is based on the company’s strong performance and Japan’s steady economic recovery, which should support the sector’s solid fundamentals and accelerate the trading company’s earnings growth and financial improvements.
TIS is around 89% owned by the MC group. The company is the largest distributor of commercial vehicles in Thailand and is involved in automobile-related businesses, i.e. car assembly, die and parts manufacturing, after-sales service, automobile export, transportation and car hire-purchase service, via its subsidiaries and associates. TIS has maintained a leading market position in commercial vehicles in Thailand for 23 consecutive years, with market share of around 40%.
CONTACT: Lertchai Kochareonrattanakul, Soamsiri Chadavadh, Vincent Milton, Bangkok, Tel: +662 655 4755; Satoru Aoyama, Tokyo, Tel: +81 3 3288 2691.
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.
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