TRIS Rating has assigned "AAA" ratings to the Bt10,300 million debentures (DAD12NA, DAD15NA, DAD20NA and DAD25NA) with tenors of 7, 10, 15, and 20 years, to be issued by DAD SPV Co., Ltd. (DAD SPV or the Issuer). The Issuer is a limited liability company established under the laws of Thailand and is expected to be granted special purpose vehicle status by the Securities and Exchange Commission (SEC). Dhanarak Assets Development Co., Ltd. (DAD), a wholly-owned subsidiary of the Ministry of Finance (MOF), holds 49% of the Issuer. These debentures are issued under the Bt24,000 million securitization program of the Issuer. The proceeds from these rated debentures will be used to partially fund the construction of the Bangkok Metropolitan Government Office Center (the Government Office Center) on Chaeng Wattana road. The remaining debentures will be issued during 2006-2007.
TRIS Rating reported that the ratings reflect the creditworthiness of the sole tenant of the Government Office Center, the Treasury Department (TD or the Tenant), which is a department of the Thai government, which is rated "AAA", and the certainty of the cash flow stream from the lease and service payments from TD, which is sufficient to meet all obligations in a timely manner. The rated debentures are structured to receive lease and service payments from TD under a 30-year Building Space Lease Agreement, a 30-year Service Agreement, and a 5-year Furniture Procurement Agreement, collectively referred to as the "Underlying Agreements", that TD has with DAD. The Tenant is not permitted to terminate the lease if the debentures issued under this securitization program or any new debentures issued to replace the existing debentures have not been fully paid. In addition, the Tenant does not have the ability to abate rent, even in the context of a casualty or condemnation. Finally, any future issuance of debentures by the Issuer under this securitization program will be subject to TRIS Rating's affirmation that the ratings on the existing debentures will not be downgraded.
TRIS Rating said that this transaction is the result of the Cabinet resolution on 25 May 2004, which approved the establishment of the Government Office Center on Chaeng Wattana road, by issuing securitization debentures via a special purpose vehicle to fund this project. The Cabinet's 2004 resolution allowed TD to set up a budget for the rental payments of this Government Office Center on behalf of other government-related entities in the Government Office Center for the whole 30-year lease period. Therefore, the likelihood that TD will get this budget allocation is high though this budget must be approved by Parliament every year. TD has established DAD to build and operate the Government Office Center. DAD will enter into two land lease agreements with the MOF for a total period of 33 years. The first agreement is a 3-year land lease period for construction, while the second agreement covers a 30-year land lease period for administration. TD, on behalf of other government-related entities, will then enter into the Underlying Agreements with DAD in order to lease the office space from DAD.
TRIS Rating said, DAD will fund construction of the Government Office Center by selling the rights to receive the lease and service payments from TD to the Issuer. The purchase price of these rights will be approximately Bt40,000 million, which will be partly paid by the proceeds from the debentures; the remaining balance will be paid in the form of a subordinated promissory note (P/N). The debentures will have a claim senior to the subordinated P/N holder (DAD). This structure will serve as a credit enhancement for the debentureholders and will ensure that DAD will transfer the right to receive the entire amount of the lease and service payments from TD to the Issuer on the first issuance of debentures, irrespective of the amount of debentures issued or even if no debentures are subsequently issued. The Government Office Center will have a total usable office area of 484,000 square meters, with a total construction cost of around Bt19,016 million, and is expected to be complete and ready for rent by the end of June 2008. Starting from 1 July 2008, TD commits to make annual lease and service payments, in advance, directly to the Issuer, irrespective of whether construction of the leased properties is complete. The Issuer will use the cash flows from the lease and service payments mainly to pay taxes, fees, third-party expenses, and service debt obligations. - End
DAD SPV Co., Ltd. (DAD SPV) Issue Ratings: Up to Bt24,000 million debentures issued under the Project approved under the Emergency Decree on Special Purpose Vehicle for Securitization B.E. 2540: - DAD12NA: Bt1,500 million debentures due 2012 AAA - DAD15NA: Bt2,000 million debentures due 2015 AAA - DAD20NA: Bt1,800 million debentures due 2020 AAA - DAD25NA: Bt5,000 million debentures due 2025 AAA