Fitch Ratings (Thailand) has affirmed the National Long-Term Ratings on the guaranteed debentures of Risland (Thailand) Company Limited (RLT) at 'BBB+(tha)'. The Outlook is Negative. The debentures are guaranteed by China-based Country Garden Holdings Company Limited (CGH). The guaranteed debentures' ratings are based entirely on our assessment of CGH's credit profile.
The affirmation follows the 9 November 2022 affirmation of guarantor CGH's Long-Term Issuer Default Ratings at 'BB-' with a Negative Outlook before the ratings were withdrawn.
KEY RATING DRIVERS
The ratings on RLT's guaranteed debentures reflect the credit enhancement provided to investors by the full, unconditional and irrevocable guarantee by the parent, CGH. The guarantee ranks at least pari passu with CGH's unsecured and unsubordinated obligations. CGH's credit profile is supported by the company's strong market position, scale and diversification.
The Negative Outlook reflects Fitch's view that Chinese property developers' persistently challenging operating and funding environment should pose a risk to CGH's credit profile and, therefore, the ratings of RLT's guaranteed debentures.
DERIVATION SUMMARY
The ratings on RLT's guaranteed debentures are based entirely on the credit profile of the guarantor, CGH, a leading homebuilder in China with one of the most well-diversified land banks among peers. CGH's credit profile should be comparable to the standalone credit profiles of Global Power Synergy Public Company Limited (GPSC, BBB-/A+(tha)/Stable; Standalone Credit Profile: bb/a-(tha)), a leading private power producer in Thailand with a 10% share of domestic power generation, and IRPC Public Company Limited (A-(tha), Standalone Credit Profile: bbb(tha)), Thailand's third-largest oil refiner and petrochemical producer.
GPSC has stronger revenue visibility than a property developer as the majority of sales are under power purchase agreements with strong counterparties. On the other hand, IRPC has higher earnings volatility due to commodity-price risks. RLT's guaranteed debentures are therefore rated one notch below GPSC's standalone credit profile while their ratings are one notch higher than IRPC's standalone credit profile.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
- We do not expect an upgrade in the next 12-18 months as the Outlook is Negative; strengthening of CGH's credit profile could lead to the revision of the Outlook to Stable
Factors that could, individually or collectively, lead to negative rating action/downgrade:
- A weakening of CGH's credit profile
ISSUER PROFILE
RLT is 100% indirectly owned by CGH, a leading homebuilder in Guangdong, China. RLT launched its first two projects in Thailand in 2018. It now has seven condominium and low-rise projects.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The rating on RLT's guaranteed debentures is based entirely on the credit profile of the guarantor, CGH.
Additional information is available on www.fitchratings.com