TEXT-S&P rates SMRT Capital Pte. Ltd. senior unsecured notes 'AAA'
(The following statement was released by the rating agency)
Oct 02 - Standard & Poor's Ratings Services today assigned its 'AAA' issue rating and 'axAAA' ASEAN regional scale rating to two senior unsecured notes issued by SMRT Capital Pte. Ltd. The notes, a five-year Singapore (S$) 350 million 1.200% note and 10-year S$100 million 2.363% note, are issued under the company's S$1 billion multicurrency guaranteed medium-term note program. The program is unconditionally and irrevocably guaranteed by the company's parent, SMRT Corp. Ltd. (AAA/Stable/--; axAAA/axA-1+). The company expects to use the proceeds for capital expenditure, business expansion, and general working capital for SMRT and its subsidiaries.
The corporate credit rating on Singapore-based public transport services provider SMRT Corp. Ltd. reflects our view that there is an "extremely high" likelihood that the government of Singapore (unsolicited rating AAA/Stable/A-1+; axAAA/axA-1+) would provide timely and sufficient extraordinary support to the company in the event of financial distress. SMRT's strategic and dominant market position also supports the rating. On the other hand, these strengths are tempered by expected financial weakness due to high capital expenditure over the next two years. We assess SMRT's stand-alone credit profile to be 'aa-'.
The stable outlook is based on our expectation that government support for SMRT will materialize in a timely manner, in accordance with the company's licensing operating agreement. We believe such support will mitigate SMRT's capital spending burden, which may lead us to assess the company's financial risk profile as "modest" over the next two years. The outlook also reflects our view that SMRT will maintain its excellent business risk profile by maintaining its dominant position in the Singapore transport industry.
RELATED CRITERIA AND RESEARCH
-- SMRT Corp. Ltd. 'AAA' Ratings Affirmed On Rising Likelihood Of Extraordinary Government Support; Outlook Stable, Sept. 27, 2012
-- Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010
-- Stand-Alone Credit Profiles: One Component Of A Rating, Oct. 1, 2010
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008