TRIS Rating Co., Ltd. has revised downward the rating outlook of the guaranteed debentures of Honda Leasing (Thailand) Co., Ltd. (HLTC or Issuer) to “negative” from “stable.” At the same time, TRIS Rating has affirmed “AAA” rating for HLTC’s guaranteed debentures. The outlook revision reflects an expected decline in operating and financial performance, in the short to medium term, of Honda Motor Co., Ltd. (HMC), the keep well provider and the parent company of Honda Automobile (Thailand) Co., Ltd. (HATC), the Guarantor of HLTC’s debentures.
HMC is rated “A+” with “negative” outlook by Standard and Poor’s (S&P) and “A1” with “stable” outlook by Moody’s Investors Service (Moody’s). On 25 April 2011, S&P revised downward the outlook of HMC to “negative” from “stable” to reflect the likelihood that operating and financial performance of HMC in FY2012 will be deteriorated from significant production cut resulting from parts shortages following the significant earthquakes and tsunami in Japan on 11 March 2011. In addition, the extended production cut may erode the market share and competitive position of the company in the longer term.
TRIS Rating said, although HMC’s outlook is revised downward to “negative” by S&P, HMC’s current company ratings of “A+” assigned by S&P and “A1” by Moody’s remain strong compared with the “AAA” national scale rating in TRIS Rating’s database of rated companies in Thailand. Therefore, TRIS Rating affirms the rating of HLTC’s guaranteed debentures at “AAA”.
The “AAA” rating of HLTC’s guaranteed debentures continues to reflect the unconditional and irrevocable guarantee by HATC, whose creditworthiness is enhanced by the keep well agreement provided by its ultimate parent company, HMC. The rating takes into consideration the strong 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, said TRIS Rating. -- End
Rating Outlook: Negative from Stable
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