MOODY'S RATES CAPITARETAIL SINGAPORE LIMITED CMBS Aaa
81 Million And S$33 Million of Asset-Backed Securities Rated.
Hong Kong, February 27, 2004 -- Moody's Investors Service has assigned definitive ratings to the three
classes of bonds issued by CapitaRetail Singapore Limited. This
transaction is a Singapore CMBS transaction sponsored by CapitaLand Limited,
and BNP Paribas and Oversea-Chinese Banking Corporation Limited
brought the transaction to the market. The complete rating actions
are as follows.
Issuer: CapitaRetail Singapore Limited
67,500,000 Secured Floating Rate Final Class A Bonds
due 2009, rated Aaa
13,500,000 Secured Floating Rate Final Class B Bonds
due 2009, rated Aa2
S$33,000,000 Secured Fixed Rate Final Class C Bonds
due 2009, rated A2
The above ratings address the expected loss posed to the investors of
the three classes of bonds by the legal final maturity date in August
In assigning the ratings, Moody's considered, among other
things, the following factors:
1. the quality and value of the three properties, all of
which are suburban shopping malls located within close proximity to residential
2. the overall loan-to-value (LTV) ratio of 54.7%
and stressed debt service coverage ratio (DSCR) of 1.64 times,
based on Moody's assumed loan constant;
3. the level of subordination provided to each class of rated bonds
by bonds junior to them in accordance with their payment priorities;
4. a pre-funded reserve fund existing on the closing date
to cover capital expenditure, security deposit refund liabilities,
and potential mortgage interest shortfalls;
5. the swap arrangements to mitigate the mismatches between the
mortgage loan payments and the rated bonds' obligations;
6. the experience of CapitaLand Retail Management Pte. Ltd.
in managing the properties; and
7. the transaction's legal and structural integrity.
CapitaRetail Singapore Limited, the issuer, issues four classes
of bonds (A to D), of which three (A to C) are rated. It
has also already issued the subordinated Class E bonds in December 2003.
It uses the bond proceeds from Class A to Class D to re-finance
the funding of three existing mortgage loans in three property trusts.
In return, it holds the security interest over the assets of the
Each property trust owns a suburban mall in Singapore. It uses
the mortgage loan proceeds to re-finance the existing debt secured
by the property. It has also issued units to make up the equity
portion, and such units have been subscribed by the issuer,
using proceeds from the Class E bonds.
Payments to the bondholders derive ultimately from the cash flows generated
from the properties. Interest is paid on a semi-annual basis,
while principal is repaid on the expected maturity date in February 2008.
However, if the bonds cannot be fully repaid on that date,
there is an 18-month tail period for the liquidation of the properties
to complete. Both interest and principal payments upon maturity
are paid on a sequential basis and in alphabetical order, starting
from the Class A bonds.
Under certain circumstances, any one of the mortgage loans can be
prepaid in full, but not in part, after February 27,
2007. If such developments are to happen, the loan proceeds
will be distributed on a pro-rata basis among the Class A to Class
A pre-funded reserve fund exists in each property trust to provide
for the needed liquidity. Each holds all security deposits,
projected capital expenditures, and projected property enhancement
capital expenditure for the relevant property. If the three-month
rolling average DSCR deteriorates to a certain level, excess cash
will be diverted to the reserve account until an amount - which
is equivalent to an additional three months of mortgage loan interest
and senior expenses - is built up.
The issuer enters into swap arrangements to mitigate the currency and
interest rate mismatches arising from the mortgage loans and the bonds.
Bukit Panjang Plaza, Lot One Shoppers' Mall and Rivervale Mall are
the three suburban malls in this transaction. They are situated
close to residential properties which are occupied by mainly lower-middle
and middle income groups. They are accessible by mass transportation
and mall traffic has the potential to increase because the residential
estates nearby still have considerable room to accommodate higher population
levels. The property manager plans to implement various changes
to the malls with the aims of attracting suitable tenants, maintaining
their continuity, improving rental income, and achieving optimal
use of retail space.
Moody's considered the attributes of the three properties, the outlook
of the Singapore retail market, along with the transaction's payment
mechanism, structural features and the subordination provided to
each class of the rated bonds. Consequently, Moody's is of
the opinion that the subordination level of each class of rated bond is
enough to protect its investors against loss that is consistent with the
A more detailed analysis of the transaction is now available on the Moody's
The issuer is a bankruptcy-remote special purpose vehicle incorporated
under the laws of Singapore. CapitaRetail Singapore Management
Pte. Ltd. is the portfolio manager managing the assets and
liabilities of each of the property trusts, and CapitaLand Retail
Management Pte. Ltd. is the property manager managing the
The property manager is currently managing four retail properties in Singapore
in another Moody's-rated transaction, Silver Maple Investment
Corporation Ltd. Moody's believes that the experience of the property
manager can allow it to perform its duties in a satisfactory manner.
Both the portfolio manager and the property manger are indirect,
wholly-owned subsidiaries of CapitaLand Limited, one of the
largest listed real estate companies in Southeast Asia.
Moody's Investors Service is a publisher of rating opinions and research.
It is not involved in the offering or sale of any securities, nor
is it acting on behalf of the offering party. This release is not
a solicitation or a recommendation to buy, hold or sell securities.
Michael M. Ye
Structured Finance Group
Moody's Asia Pacific Ltd.
Asst Vice President - Analyst
Structured Finance Group
Moody's Asia Pacific Ltd.