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Rating Action:

Moody's assigns Baa2 to RATCH's guaranteed MTN drawdown

29 Apr 2014

Hong Kong, April 29, 2014 -- Moody's Investors Service, ("Moody's") has assigned a Baa2 rating to RH International (Singapore) Corporation Pte. Ltd's US$ senior unsecured fixed rate notes, which are guaranteed by its parent, Ratchaburi Electricity Generating Holding PCL's ("RATCH", Baa1 stable). The notes are drawn down under its $1 billion guaranteed medium term notes (MTN) program.

The rating outlook is stable.

The proceeds will be used for refinancing and general corporate purposes.

RATINGS RATIONALE

"The drawdown of the guaranteed MTN program will enhance RATCH's liquidity, and strengthen its financing channels in the offshore market," says Ivy Poon, a Moody's Analyst.

On 22 April 2014, Moody's affirmed RATCH's Baa1 corporate family rating and assigned a provisional (P)Baa2 rating to the $1 billion guaranteed MTN program which was to be issued by RH International (Singapore) Corporation Pte. Ltd. and/or RATCH.

The Baa1 corporate family rating reflects RATCH's: (1) solid and strategic position as the largest independent power producer in Thailand; (2) stable business profile, underpinned by the robust power purchase agreements; and (3) strong relationship with the Electricity Generating Authority of Thailand ("EGAT", unrated), its parent.

At the same time, the rating is constrained by the company's overseas expansion strategy and the consideration that its sizable capex plan could lead to increased execution and development risks, and could also create pressure on its credit metrics.

Sizable debt exposures at its joint ventures are also pressuring RATCH's adjusted credit metrics, after incorporating its pro-rata share in the joint ventures.

In addition, the rating factors in a one-notch uplift, based on our expectation of support from EGAT. The parent's credit profile is stronger than that of RATCH.

The Baa2 senior unsecured rating is one notch lower than the corporate family rating to reflect structural subordination risk.

The stable outlook reflects Moody's expectation that there will be no material adverse changes in the regulatory environment for Thailand's electricity market over the near to medium term. The stable outlook is also consistent with the rating of the sovereign, which is the 100% owner of EGAT, RATCH's parent.

RATCH's financial metrics are expected to remain weak when compared to those of its high Baa rated peers, and, as such, the possibility of an upgrade is remote.

However, because its operations and credit profile are closely linked to those of EGAT and in turn Thailand's sovereign rating, a sovereign upgrade could trigger a review of RATCH's rating.

The rating could be downgraded if RATCH's credit strength deteriorates substantially due to aggressive debt-funded investments, or a material increase in its business risk profile due to overseas expansion. The key metrics that Moody's would consider for a downgrade include adjusted FFO/interest coverage falling below 2.5x and adjusted FFO/ net debt falling below 10%-15% on a sustained basis. The credit metrics are adjusted for joint-venture exposures.

In addition, a downgrade of Thailand's sovereign rating or a material reduction of EGAT's stake in the company would also be negative for RATCH's rating.

The principal methodology used in this rating was the Unregulated Utilities and Power Companies published in August 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Ratchaburi Electricity Generating Holding PCL is the largest independent power producer in Thailand engaged in electricity generation. It had a total installed capacity of 5.5 GW as of February 2014. Its domestic installed capacity was 4.6 GW and accounted for about 13.6% of Thailand's total power generating capacity. It also has operations in Australia and Laos. The company is 45% owned by the Electricity Generating Authority of Thailand (EGAT) and listed on the Thailand Stock Exchange.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt 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 rating action on the support provider and in relation to each particular 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.

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The first name below is the lead rating analyst for this Credit Rating and the last name below is the person primarily responsible for approving this Credit Rating.

Ivy Poon
Analyst
Project & Infrastructure Finance
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Patrick Mispagel
Associate Managing Director
Project & Infrastructure Finance
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077

Moody's assigns Baa2 to RATCH's guaranteed MTN drawdown
No Related Data.
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