TRIS Rating Co., Ltd. has affirmed the “AAA” ratings for Honda Leasing (Thailand) Co., Ltd.’s (HLTC or Issuer) guaranteed debentures with “stable” outlook. These debentures are 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 “stable” outlook by Standard and Poor’s (S&P) and “A1” with “stable” outlook by Moody’s Investors Service (Moody’s). The ratings of HLTC’s debentures reflect the unconditional and irrevocable guarantee by HATC, whose creditworthiness is enhanced by the keep well agreement provided by its ultimate parent, 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 standard 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 and declining export sales volume as a result of global economic slowdown.
The “stable” outlook of HLTC’s guaranteed debentures reflects the creditworthiness of HATC, which is enhanced by the keep well agreement provided by its ultimate parent company, HMC.
TRIS Rating reported that 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. -- End
HLTC103A: Bt1,700 million guaranteed debentures due 2010 Affirmed at AAA HLTC10OA: Bt3,000 million guaranteed debentures due 2010 Affirmed at AAA HLTC119A: Bt1,300 million guaranteed debentures due 2011 Affirmed at AAA Rating Outlook: Stable
Copyright 2009, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.