Bangkok--1 Jul--Fitch Ratings
Fitch Ratings (Thailand) Limited has today upgraded the National Long-term ratings for the two tranches of amortising and guaranteed debentures issued by Gulf Cogeneration Company Limited (GCC) to ‘AAA(tha)’ from ‘AA+(tha)’. This includes the five-year tranche of THB1.16bn and the 10-year tranche of THB2.9bn, maturing April 2011 and April 2016, respectively. The Outlook remains Stable.
The upgrades follow the recalibrating of the mapping between the National and International rating scales and the broad review of all National ratings under Fitch Ratings (Thailand)’s coverage in order to maintain consistency between the two rating scales.
The ratings of the debentures are based entirely on the irrevocable and unconditional guarantee of the principal and interest payment of the debentures by Ireland-based DEPFA BANK plc (DEPFA, ‘A-’/Stable). Bondholders should note that the guarantee does not include additional interest, that is the difference between the debenture interest rate and the debenture default interest rate on the unpaid principal and interest, in case of a default. However, this will be mitigated by a reserve fund of THB5.0m. Bondholders may receive payment in Japanese Yen from the guarantor in the event that the Bank of Thailand imposes exchange controls that restrict a conversion to Thai baht.
In October 2007, Hypo Real Estate Holding AG (HRE, ‘A-’/Stable) acquired DEPFA. DEPFA’s Long- and Short-term IDRs and Support Rating are aligned with HRE’s ratings, which reflect the extremely high likelihood of continued sovereign support and the strong linkages between HRE’s operating companies. Through a public offer and capital increase, the Federal Republic of Germany (FRG), acting through the German Financial Markets Stabilisation Fund (SoFFin), acquired 90% of HRE.
Fitch understands that SoFFin intends to squeeze out HRE’s minority shareholders to gain full control of the group, and that HRE will proceed with its restructuring which was initiated in late-2008. As announced earlier, the group's organisational structure was further streamlined with the legal merger of Depfa Deutsche Pfandbriefbank AG into Hypo Real Estate Bank AG on 29 June 2009; the merged entity was renamed to Deutsche Pfandbriefbank AG and represents the group’s core bank, combining strategic assets and conducting new business activities (public finance and real estate lending with a focus on Europe and Germany, to the extent it can be predominantly funded by Pfandbrief). DEPFA manages the group's non-core activities including the infrastructure finance, capital markets and trading businesses, which will be gradually reduced and run-off. On 22 June 2009, HRE announced it would examine possibilities for transferring significant portions of its problem loans and its non-strategic portfolio to a wind-down institute.
DEPFA ran into liquidity problems in late 2008 as counterparties’ confidence in the bank swiftly waned following the bankruptcy of Lehman Brothers Holding Inc. Liquidity support for HRE group provided by FRG, SoFFin, and a consortium of financial institutions totalled EUR100bn at end-March 2009.
Contacts: Obboon Thirachit, Lertchai Kochareonrattanakul, Vincent Milton, Bangkok, +662 655 4755; Simone Brehmer, Frankfurt, +49 69 768076 263.
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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