Bangkok--30 Mar--Fitch Ratings
Fitch Ratings (Thailand) Limited has today affirmed the National rating of Osprey Series 2 Company Limited’s short-term bonds rollover programme (“the CP”) at ‘F1(tha)’.
The affirmation is based on the quality of the underlying assets - NHA SPV 2 Company Limited’s (NHA SPV 2) 20-year amortising bonds, the revolving liquidity facility provided by Krung Thai Bank Public Company Limited (KTB, ‘AA+(tha)’/’F1+(tha)’) and the interest rate swap agreement between Osprey 2 and KTB. While Fitch has downgraded the rating of NHA SPV 2’s bonds to ‘A(tha)’ from ‘A+(tha)’ and assigned a Stable Outlook to the bonds, the agency views that the current rating of these bonds continues to support the CP’s rating of ‘F1(tha)’.
The rating of NHA SPV 2’s bonds is mainly based on the defaulted receivable buyback support from National Housing Authority (NHA). Despite the fact that implementation of the government-initiated ‘Baan Eua-Arthorn’ housing project has significantly weakened NHA’s financial position and profitability over the past two years, NHA’s credit profile continues to reflect the full government ownership and control of its operations, its policy role as the key provider of social housing, and funding support received from the government. In this regard, a majority of NHA’s debts are currently guaranteed by the Ministry of Finance (MOF), although Fitch notes that under the NHA Act there is no explicit government guarantee for full and timely repayment of its liabilities. According to the Public Debt Management Act of 2005, the MOF is restricted in its ability to provide guarantees for any state enterprise which is not a public utility service provider and reports an operating loss for more than three consecutive years. On this point, Fitch notes that NHA has reported losses for two consecutive years. Nevertheless, NHA is in the process of improving its profitability (through government support measures) and changing its status to a public utility service provider in order to continue its eligibility in receiving debt guarantees from the MOF. The change to public utility servicer provider status should also entitle NHA to receive other benefits with regards to government support.
This transaction is the second publicly-rated securitisation programme of Thai residential hire purchase receivables originated by NHA that is financed through the CPs issued by Osprey 2. Osprey 2, which acts as NHA SPV 2’s funding conduit, may issue CPs with maturities of up to 270 days as necessary, until NHA SPV 2’s bonds are fully amortised. At end-February 2009, approximately 85% of NHA SPV 2’s bonds had been repaid, leaving THB170m worth of bonds outstanding. The over-collateralisation level has been maintained at 15% since closing, and the buyback support from NHA now stands at 100% of the outstanding bonds.
A copy of the performance report will be available shortly on the agency’s websites, www.fitchratings.com and www.fitchratingsasia.com.