Bangkok--24 Jun--Fitch Ratings
Fitch Ratings (Thailand) Limited has today affirmed the National Long-term ratings of Gulf Cogeneration Company Limited (GCC)’s two tranches of amortising and guaranteed debentures at ‘AAA(tha)’. This includes the THB1.16bn five-year tranche and the THB2.9bn 10-year tranche, maturing April 2011 and April 2016, respectively. The Outlook is Stable.
The ratings of the debentures are based entirely on the irrevocable and unconditional guarantee of the debentures’ principal and interest payment by DEPFA BANK plc (DEPFA, ‘A-’/Stable). DEPFA’s rating is equal to Thailand’s international Long-term local currency IDR of ‘A-’. Fitch notes that any changes in the international rating differential between DEPFA and Thailand may affect the debentures’ National rating. In addition, a one-notch change in the international ratings could result in a change of greater than one notch in National ratings.
Bondholders should note that the guarantee does not include additional interest, i.e. 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, if the Bank of Thailand imposes exchange controls that restrict a conversion to Thai Baht.
The ratings of DEPFA, 100% owned by Hypo Real Estate Holding AG (HRE Group, ‘A-’/Stable), reflect the extremely high probability of support for the group from its 100% owner, the German Financial Market Stabilisation Fund (SoFFin) which acts on behalf of the Federal Republic of Germany (FRG); and the strong linkages between HRE Group’s operating companies. HRE Group is one of the most prominent German bailout cases since the onset of the financial market crisis — given the amount of support received and measures taken by FRG to gain full control. In light of the support received, HRE Group’s restructuring programme is still subject to an investigation through the European Commission; a final decision is expected by mid 2010. HRE Group’s restructuring programme includes balance sheet reduction and streamlining business activities. Based on its restructuring plan, strategic businesses, including European commercial real estate and public sector lending, which are eligible for refinancing via Pfandbriefe (covered bonds), will be concentrated in Deutsche Pfandbriefbank AG (‘A-’/Stable), 100% owned by HRE Group; whereas, the non-strategic part, which includes mainly infrastructure and capital market activities, will be held in DEPFA. The non-strategic business will be run down by maturing assets, selective sales and potential through an asset spin-off. HRE Group made an official application to spin off up to EUR210bn of its non-strategic and non-performing assets to a federal run-off institution (Abwicklungsanstalt), which is expected to be set up during the second half of 2010.
GCC is a small power producer that sales electricity primarily to Electricity Generating Authority of Thailand (EGAT), Thailand’s national integrated electric utility company, under the Small Power Producer (SPP) programme. GCC started operations in September 1999 and has a current generating capacity of 112MW of electricity and 16 tonnes per hour of steam. GCC is a wholly-owned subsidiary of Gulf Electric Public Company Limited, an electric holding company with four SPP and one Independent Power Producer (IPP) projects, with a total installed capacity of 1,847MW.
Applicable Criteria available on Fitch’s website at www.fitchratings.com: “Corporate Rating Methodology”, dated 24 November 2009.
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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 relatively low international sovereign ratings and where there is demand for such 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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