Singapore, November 13, 2019 -- Moody's Investors Service has today assigned Aaa ratings to the
proposed 12-year & 30-year EUR denominated senior unsecured
notes to be issued by Temasek Financial (I) Limited, a wholly owned
financing subsidiary of Temasek Holdings (Private) Limited ("Temasek",
Aaa stable).
These notes are issued pursuant to USD20 billion Guaranteed Global Medium
Term Note (MTN) Program ((P)Aaa) and are irrevocably and unconditionally
guaranteed by Temasek. The proceeds will be provided to Temasek
and its investment holding companies to fund their ordinary course of
business.
The outlook on the rating is stable.
RATINGS RATIONALE
'Temasek's Aaa rating reflects its strong fundamental credit profile as
an investment company. This strength is supported by its steady
and recurring dividend income as well as its large and increasingly diverse
investment portfolio. Furthermore, Temasek's largest investee
companies and major dividend contributors have strong investment grade
credit profiles,' says Vikas Halan, a Moody's Senior Vice
President.
Temasek does not guarantee the financial obligations of its portfolio
companies. Moody's only assesses the parent and its investment
holding companies and special purpose funding vehicles when assigning
the ratings. On this basis, Temasek continues to maintain
a net cash position as of March 2019.
'We expect the company to maintain net borrowings to market value of portfolio
below 5% and FFO interest coverage above 15x,' says Halan
who is Moody's Lead Analyst for Temasek.
The rating also reflects Temasek's excellent liquidity profile and is
supported by a sizeable reserve of cash and liquid securities which Moody's
expect to be maintained. This reserve provides strong debt service
coverage to mitigate the risk of any volatility in cash flow and asset
value.
As a government-related issuer, Temasek's ratings also benefit
from its 100% ownership by the Government of Singapore through
the Minister for Finance, although currently its baseline credit
assessment -- the measure of its stand-alone credit
quality -- is also aaa.
Environmental, social and governance (ESG) risks for Temasek were
assessed as below:
Firstly, Temasek has indirect exposure to environmental risk through
its investee companies. However, Temasek's portfolio
largely consists of companies that have low exposure to environmental
risk. Sustainability of returns is integral to Temasek's
investment approach. Moody's estimates that as of 31 March
2019, Temasek's exposure to sectors that have elevated or
moderate environmental risk accounts for a small portion of its portfolio
and dividend income. Its exposure to energy & resources sector
is only at about 3% of the portfolio.
Secondly, despite having a single shareholder, the governance
risk for Temasek is largely mitigated because of oversight by a board
that consists of 11 independent directors out of a total 13 board of directors
and Temasek's track record of maintaining an extremely conservative
financial profile.
The outlook is stable reflecting our expectation that Temasek's credit
metrics will remain strong and that management will retain its prudent
and conservative approach to its investment and funding strategy.
The rating is Aaa and cannot be upgraded.
Temasek has a standalone aaa rating. Should its underlying credit
fundamentals deteriorate and the fundamental rating be downgraded,
our Joint Default Analysis framework would become relevant to the rating
analysis.
Downward rating pressure on the standalone credit rating could emerge
if (1) Temasek were to make aggressive investments, resulting in
a material deterioration in the credit quality of its investment portfolio;
(2) the amount and quality of its cash and near-cash resources
were to deteriorate significantly; or (3) there were indications
of moral hazard behavior - such as providing funding support for
non-performing investee companies or channeling financial resources
to its government shareholder - that could have an adverse impact
on Temasek's financial position.
The methodologies used in these ratings were Investment Holding Companies
and Conglomerates published in July 2018, and Government-Related
Issuers published in June 2018. Please see the Rating Methodologies
page on www.moodys.com for a copy of these methodologies.
Temasek is an investment company based in Singapore and is 100%-owned
by the Minister for Finance, a body corporate under the Singapore
Minister for Finance (Incorporation) Act (Chapter 183).
REGULATORY DISCLOSURES
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Vikas Halan
Senior Vice President
Corporate Finance Group
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Laura Acres
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077