Hong Kong, May 29, 2019 -- Moody's Investors Service has assigned a Baa3 senior unsecured rating
to the EUR notes to be issued by Bright Food Singapore Holdings Pte.
Ltd.
The notes will be irrevocably and unconditionally guaranteed by Bright
Food International Ltd. (BFI, Baa3 stable). In addition,
the notes will be supported by a keepwell, liquidity support and
equity interest purchase undertaking covenants deed from its ultimate
parent, Bright Food (Group) Co., Ltd. (BFG,
Baa2 stable).
The proceeds from the proposed notes will be used to refinance BFG's
existing offshore debt and for replenishment of its working capital.
The bond rating also reflects Moody's expectation that BFI will complete
the bond issuance on satisfactory terms and conditions, including
proper registrations with China's (A1 stable) National Development and
Reform Commission.
RATINGS RATIONALE
The Baa3 rating on the proposed EUR bonds reflects the irrevocable and
unconditional guarantee from BFI and the fact that the notes rank pari
passu to BFI's senior unsecured obligations.
The keepwell, liquidity support and equity interest purchase undertaking
covenants deed from BFG demonstrates the importance of BFI to the group,
as also reflected by the three-notch parental uplift incorporated
in BFI's Baa3 rating.
The bond issuance will not materially increase BFI's debt leverage,
because the company will primarily use the proceeds to refinance existing
debt.
BFI's Baa3 issuer rating incorporates its ba3-level standalone
credit strength and a three-notch uplift based on Moody's
assessment of support from its parent, BFG.
The three-notch parental uplift reflects BFI's importance to and
close linkage with BFG. The support assessment reflects BFI's 100%
ownership by its parent, as well as the parent's track record of
providing support to BFI, and the high reputational risk for the
parent and the Shanghai Municipal Government if BFI were to default.
BFI's standalone credit strength is underpinned by its diversified geographic
and business profile, strong brand awareness and leading local market
share in certain sub-segments.
The stable outlook reflects Moody's expectation that over the next 12-18
months (1) BFI's business and financial profiles will remain stable;
and (2) the company will remain an important subsidiary of its parent,
and will continue to obtain support from BFG.
Moody's could upgrade BFI's rating if the company (1) further enhances
its business profile, for instance, by gaining stronger market
positions and achieving higher profit margins; (2) demonstrates disciplined
financial management in pursuing growth; and (3) materially reduces
its financial leverage.
Credit metrics indicative of upward pressure on the rating including adjusted
retained cashflow (RCF)/net debt exceeding 20%, and adjusted
debt to capitalization falling below 45% on a sustained basis.
Moody's could downgrade BFI's rating if (1) its business profile deteriorates
materially; and (2) the company pursues large-scale debt-funded
acquisitions that result in significantly higher leverage levels.
Credit metrics indicative of downward pressure on its rating include adjusted
RCF/net debt falling below 10%, and adjusted debt to capitalization
exceeding 65% on a sustained basis.
Moody's could also downgrade the rating, without a decline in the
company's standalone credit strength, if Moody's assesses that BFI
will receive lower levels of support from its parent, for example
due to a weakening of the parent's credit quality.
The principal methodology used in this rating was Global Packaged Goods
published in January 2017. Please see the Rating Methodologies
page on www.moodys.com for a copy of this methodology.
Bright Food International Ltd. (BFI) was established in 2011.
The company is fully owned by Bright Food (Group) Co., Ltd.
(BFG), which in turn is ultimately 100% owned by the State-owned
Assets Supervision and Administration Commission of the Shanghai Municipal
Government.
BFI is the major operating and financing platform of its parent's overseas
investments.
Bright Food Singapore Holdings Pte. Ltd. is a wholly-owned
subsidiary of BFI which, in turn, is a wholly owned subsidiary
of BFG.
The local market analyst for these ratings is Janet Lu, +86
(21) 2057-4029.
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 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.
Moody's considers a rated entity or its agent(s) to be participating
when it maintains an overall relationship with Moody's. Unless
noted in the Regulatory Disclosures as a Non-Participating Entity,
the rated entity is participating and the rated entity or its agent(s)
generally provides Moody's with information for the purposes of
its ratings process. Please refer to www.moodys.com
for the Regulatory Disclosures for each credit rating action under the
ratings tab on the issuer/entity page and for details of Moody's
Policy for Designating Non-Participating Rated Entities.
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.
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.
Lina Choi
Senior Vice President
Corporate Finance Group
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
Client Service: 852 3551 3077
Gary Lau
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 852 3758 1350
Client Service: 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
Client Service: 852 3551 3077
