Bangkok--26 Sep--TRIS Rating
TRIS Rating Co., Ltd. has assigned “AAA” ratings to Honda Leasing (Thailand) Co., Ltd.’s (HLTC or Issuer) two proposed guaranteed debentures totalling Bt2,500 million with tenors of 1.5 years and 3 years.
At the same time, TRIS Rating has also affirmed the “AAA” rating for HLTC’s Bt2,000 million guaranteed debentures (HLTC07OA). All debentures are issued under the medium-term debenture programs.
The rating outlook remains “stable”.
These debentures are guaranteed by the Issuer’s parent company, Honda Automobile (Thailand) Co., Ltd. (HATC or Guarantor), which is a subsidiary of Honda Motor Co., Ltd. (HMC), a company rated “A+/Stable” by Standard and Poor’s (S&P) and “A1/Positive” by Moody’s Investors Service (Moody’s).
TRIS Rating reported that the rating of HLTC’s debentures reflects the unconditional and irrevocable guarantee by HATC, whose creditworthiness is enhanced by the keep well agreement provided by its ultimate parent, HMC. TRIS Rating takes into consideration the keep well agreement between HATC and HMC, the strategic importance of HATC as a subsidiary of HMC, and the strengths of HATC in terms of its competitive position in the Thai automotive industry, healthy financial profile, and proven ability to meet the global standard of the Honda Group. HATC’s strengths are partially offset by
its limited product line because of the strategy to focus on passenger car and sport utility vehicle (SUV) segments.
The “stable” outlook of the guaranteed debentures of HLTC reflects the credit profile of its ultimate parent company, HMC, which receives “A+/Stable” and “A1/Positive” ratings from S&P and Moody’s, respectively.
TRIS Rating said, under the keep well agreement, which is governed by Japanese law, HMC, the ultimate parent company of HATC, shall: (1) own and hold, directly and indirectly, the legal title to and beneficial interest in, at least 80% of all the issued and outstanding shares of stock of HATC; (2) cause HATC to have a positive consolidated tangible net worth; and, (3) ensure that HATC has sufficient liquidity and funds to punctually meet its payment obligations associated with the debt described in the keep well agreement. In addition, any claims on HMC arising from any funds provided by HMC to HATC are subordinated to the claims of debenture holders. So long as any debt shall be outstanding, this agreement shall not be modified, amended or terminated in any manner which may have any adverse effect upon the debenture holders unless the debenture holders and the representatives of the debenture holders have consented thereto in writing. Though the keep well agreement is not a guarantee, TRIS Rating believes that with the high credit quality of HMC and the strategic importance of HATC to HMC, HMC will provide sufficient financial support to HATC to ensure that all of the HATC’s obligations are met.