TRIS Rating Co., Ltd. has affirmed the “AAA” rating with “stable” outlook for the guaranteed debentures of Honda Leasing (Thailand) Co., Ltd. (HLTC or Issuer). The debentures is guaranteed by the issuer’s parent company, Honda Automobile (Thailand) Co., Ltd. (HATC or Guarantor), which is a subsidiary of Honda Motor Co., Ltd. (HMC), a company rated “A+” with a “stable” outlook by Standard and Poor’s (S&P) and “A1” with a “stable” outlook by Moody’s Investors Service (Moody’s).
TRIS Rating reported that the rating of HLTC’s debentures reflects the unconditional and irrevocable guarantee by HATC, whose creditworthiness is enhanced by the keep well agreement provided by its ultimate parent company, HMC. TRIS Rating takes into consideration the keep well agreement between HATC and HMC, the strategic importance of HATC as a subsidiary of HMC, the strengths of HATC in terms of its competitive position in the Thai automotive industry, healthy financial profile, and proven ability to meet the global standards of the Honda Group. HATC’s strengths are partially offset by its limited product line which reflects a strategic focus on the passenger car and sport utility vehicle (SUV) segments.
TRIS Rating said, under the keep well agreement, which is governed by Japanese law, HMC, the ultimate parent company of HATC, shall: (1) own and hold, directly and indirectly, the legal title to and beneficial interest in, at least 80% of all the issued and outstanding shares of stock of HATC; (2) cause HATC to have a positive consolidated tangible net worth; and, (3) ensure that HATC has sufficient liquidity and funds to punctually meet its payment obligations associated with the debt described in the keep well agreement. In addition, any claims on HMC arising from any funds provided by HMC to HATC are subordinated to the claims of debentureholders. So long as any debt shall be outstanding, this agreement shall not be modified, amended or terminated in any manner which may have any adverse effect upon the debentureholders unless the debentureholders and the representatives of the debentureholders have consented thereto in writing. Although the keep well agreement is not a guarantee, TRIS Rating believes that with the high credit quality of HMC and the strategic importance of HATC to HMC, HMC will provide sufficient financial support to HATC to ensure that all of HATC’s obligations are met.
The “stable” outlook for HLTC’s guaranteed debentures reflects the creditworthiness of HATC, which is enhanced by the keep well agreement provided by its ultimate parent company, HMC, said TRIS Rating. -- End
HLTC119A: Bt1,300 million guaranteed debentures due 2011 Affirmed at AAA Rating Outlook: Stable
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