/raid1/www/Hosts/bankrupt/TCRAP

/raid1/www/Hosts/bankrupt/TCRAP_Public/130916.mbx T R O U B L E D C O M P A N Y R E P O R T E R A S I A P A C I F I C Monday, September 16, 2013, Vol. 16, No. 183 Headlines A U S T R A L I A BACCHUS DISTILLERY: Cor Cordis Appointed as Administrator CROSS CITY: Operator Enters Into Voluntary Administration GIUSEPPE ARNALDO: Restaurant Placed in Liquidation IMPALA TRUST 2013-1 ABS: S&P Assigns BB Rating to Class E Notes C H I N A CHINA CEETOP.COM: Weiliang Liu Elected to Board I N D I A AAKASH GLOBAL: CARE Assigns 'BB' Rating to INR18cr LT Bank Loans AJAY PLASTIC: CARE Rates INR9cr Long-Term Bank Loans at 'BB+' ARTEDZ FABS: CARE Rates INR16.35cr Long-Term Loans at 'B' BHAGWATI KRIPA: CARE Assigns 'BB+' Rating to INR11.73cr Loans BLUEBIRD SOFTWARE: CARE Rates INR100cr LT Bank Loans at 'BB-' DHANANIA RUBBER: CARE Rates INR14.15cr LT Bank Loans at 'BB-' INVESTMENT & PRECISION: CARE Rates INR40.40cr Bank Loans at 'BB+' NIKHIL FOOTWEARS: CARE Assigns 'BB+' Rating to INR75.75cr Loans SAI AARAV: CARE Rates INR7cr Long-Term Bank Loans at 'BB' SEQUENT SCIENTIFIC: CARE Reaffirms 'B' Rating on INR178cr Loans SERMAN INDIA: CARE Assigns 'B+' Rating to INR3.5cr LT Bank Loans S.P.R CONSTRUCTIONS: CARE Assigns 'BB-' Rating to INR2.25cr Loans VATSA AUTOMOBILES: CARE Rates INR10.69cr Bank Loans at 'B+' * High Borrowing Costs to Constrain Margins for Indian Companies J A P A N GK MLOX3: Fitch Affirms Rating on Class D Notes at 'CC' N E W Z E A L A N D ALLIED FARMERS: Escapes Insolvency After Unit Raises NZ$600K P A K I S T A N PAKISTAN STEEL: Likely to Shut Operations P H I L I P P I N E S UNITRUST DEVELOPMENT: PDIC to Continue Payments Until October 7 S O U T H K O R E A * Korean Banks Likely to Remain Under Pressure, Fitch Says S R I L A N K A BANK OF CEYLON: Fitch Assigns 'BB-' Issuer Default Ratings X X X X X X X X * Moody's Expects Low High-Yield Corporate Defaults in AP Area - - - - - ================= A U S T R A L I A ================= BACCHUS DISTILLERY: Cor Cordis Appointed as Administrator --------------------------------------------------------- Yolanda Redrup at SmartCompany reports that Australia's leading manufacturer of cream liqueurs has collapsed, with the spirits and pre-mixed beverages market coming under a significant amount of pressure during the past several years. The Bacchus Distillery located in South Dandenong, Victoria, manufactures the popular liqueur brands Cowboy and Forbidden, a selection of pre-mixed and ready-to-serve drinks, Damirov vodka and a number of products under its own Bacchus brand. On September 9 the business was placed in administration, with Bruno Secatore -- bsecatore@corcordis.com.au -- and Daniel Juratowitch -- djuratowitch@corcordis.com.au -- of Cor Cordis appointed as administrators, SmartCompany discloses. The report says Bacchus Distillery products are currently distributed by Epoch Wine Group, a partnership formed in July this year. The manufacturer was established in 1994 and has grown to be the largest cream liqueur manufacturer in the Asia Pacific Region. As well as manufacturing products, the company has a research and development team dedicated to formulating new products and improving existing recipes. In 2005 the distillery won a federal government grant for SMEs and received $335,748 to develop the technology to produce a clean wine spirit aimed at delivering a low-cost, high-quality product. Bacchus Distillery chief executive Damien Hajdinjak moved to Australia in the 1980s. His family had a long history in alcohol manufacturing in Croatia, and they had previously produced premium liqueur for the royal courts of Europe. CROSS CITY: Operator Enters Into Voluntary Administration --------------------------------------------------------- Jacob Saulwick at The Sydney Morning Herald reports that Sydney's Cross City Tunnel has financially failed for the second time in eight years, entering voluntary administration on September 13. SMH relates that the decision by its owners, Cross City Motorway Pty Ltd, to appoint administrators follows the decision of the New South Wales Office of State Revenue to pursue an unpaid AUD64 million tax bill. According to the report, motorists will not notice a change because the administrators, David Merryweather and Gregory Hall of PricewaterhouseCoopers, are to maintain the $4.91 one-way toll for the motorway, which is now likely to be put up for sale. SMH says the controversial tunnel from Darling Harbour to Rushcutters Bay opened in 2005 amid predictions by its first owners that it would soon attract 70,000 motorists a day. But only about 20,000 motorists used the city bypass tunnel in 2005, and it is estimated that fewer than 40,000 a day use it now, the report relays. SMH notes that after it went into receivership in 2006, the present owners -- Royal Bank of Scotland, EISER Infrastructure Partners and Leighton Contractors -- bought it in 2007. According to SMH, the government insists they should have paid stamp duty on that transaction but last month those owners won a case in the NSW Supreme Court saying they did not need to. When the Office of State Revenue said it would appeal that decision last week, it cruelled the chances of the motorway extending its bank loans, relates SMH. "Naturally we are disappointed at this outcome," the report quotes Chairman Ed Sandrejko as saying. He blamed its demise on the refusal of the previous government to funnel enough traffic into it, the report adds. GIUSEPPE ARNALDO: Restaurant Placed in Liquidation -------------------------------------------------- Cameron Houston and Chris Vedelago at The Sydney Morning Herald report that the hospitality empire of celebrity chef Robert Marchetti is on the brink of collapse after Crown Casino restaurant Giuseppe, Arnaldo & Sons was placed in liquidation with more than 100 creditors owed AUD1.6 million. SMH relates that the restaurateur has also failed to pay substantial debts at Sydney's North Italian, which is believed to be on the market, while he is also being pursued for unpaid rent by the landlord of his former upmarket eatery, Neild Avenue, in Rushcutters Bay. According to the report, the first hint of financial difficulties came when Giuseppe, Arnaldo & Sons suddenly closed its doors last month, with a hand-painted sign bidding "Ciao" to its customers. But the scale of the financial wreckage became clearer at a creditors meeting on September 13, where more than 50 suppliers and 30 staff discovered they were unlikely to recoup their losses. Citing documents lodged with the Australian Securities and Investments Commission, SMH discloses that Mr. Marchetti's company Cucina Casalinga Italian owes Crown Casino more than AUD217,000, while the Australian Tax Office is owed AUD263,330. The business had just AUD27,500 in the bank and stock valued at AUD30,000, when liquidators were appointed, the report notes. Several creditors were left furious by Mr. Marchetti's failure to attend the meeting at Crown Casino, which was compounded by a tweet he sent on September 13 as liquidators provided a grim assessment of his failed business, SMH adds. IMPALA TRUST 2013-1 ABS: S&P Assigns BB Rating to Class E Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned ratings to seven classes of auto-, equipment-, fixtures- and fittings-, and medical practice loan-backed, floating-rate, pass-through notes issued by Perpetual Trustee Co. Ltd. as trustee of IMPALA Trust No. 1 - Sub Series 2013-1. The transaction is a securitization of fully and partially amortizing Australian-dollar, auto-, equipment-, and fixtures- and fittings-backed finance leases, commercial hire-purchase agreements, and goods mortgages mainly offered to health-industry participants and accountants, as well as practice loans offered to health-industry participants. The receivables were originated by Investec Professional Finance Pty. Ltd. and Investec Bank (Australia) Ltd. The ratings reflect S&P's view of: -- The creation of a new special-purpose subseries, coupled with the transaction's legal structure. The entity, IMPALA Trust No. 1 - Sub Series 2013-1, meets Standard & Poor's special-purpose entity criteria. -- The credit support for each class of notes, which is provided in the form of subordination comprising 8.4% provided at 'A-1+ (sf)' and 'AAA (sf)', 6.6% provided at 'AA (sf)', 5.2% provided at 'A (sf)', 3.6% provided at 'BBB (sf)', 3.1% provided at 'BB (sf)', and 2.4% provided at 'B (sf)'. -- Liquidity support equal to 1.11% of the outstanding amount of receivables, amortizing to 50% of the initial limit. Liquidity is funded from note issuance at closing, and will be held in the liquidity account. -- Principal collections also may be used to meet short-term liquidity demands. With exception of the class A notes, a class of notes cannot draw down liquidity or principal if there are unreimbursed charge offs against that class of notes. The seller notes do not have access to these liquidity mechanisms. -- The condition that all contractual payments, including the residual or balloon payments, are an obligation of the borrower. As a result, the issuer is not exposed to any market-value risk associated with the sale of the autos, equipment, and fixtures and fittings (on performing loans), which is a risk that may be associated with other products, such as operating leases. -- The benefit of a fixed-to-floating interest-rate swap provided by Australia and New Zealand Banking Group Ltd. to hedge the mismatch between the fixed-rate interest and rental payments on the receivables, and the floating-rate coupon payable on the notes. A copy of Standard & Poor's complete report for IMPALA Trust No. 1 - Sub Series 2013-1 can be found on RatingsDirect, Standard & Poor's Web-based credit analysis system, at http://www.globalcreditportal.com. The issuer has informed Standard & Poor's (Australia) Pty Limited that the issuer will be publically disclosing all relevant information about the structured finance instruments that are subject to this rating report. STANDARD & POOR'S 17G-7 DISCLOSURE REPORT SEC Rule 17g-7 requires an NRSRO, for any report accompanying a credit rating relating to an asset-backed security as defined in the Rule, to include a description of the representations, warranties and enforcement mechanisms available to investors and a description of how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities. The Standard and Poor's 17g-7 Disclosure Report included in this credit rating report is available at: http://standardandpoorsdisclosure-17g7.com/1773.pdf RATINGS ASSIGNED Class Rating Amount (mil. A$) A1 A-1+ (sf) 55.0 A2 AAA (sf) 199.7 B AA (sf) 5.0 C A (sf) 4.0 D BBB (sf) 4.3 E BB (sf) 1.5 F B (sf) 1.79 Senior seller N.R. 5.0 Junior seller N.R. 1.9 N.R.--Not rated. ========= C H I N A ========= CHINA CEETOP.COM: Weiliang Liu Elected to Board ----------------------------------------------- China Ceetop.com, Inc., held its 2013 Annual Meeting of its Shareholders on Sept. 6, 2013, at which the shareholders: (1) elected Weiliang Liu as director, (2) approved an amendment to the Articles of Incorporation to change name to Ceetop, Inc., (3) ratified the appointment of Clement C. W. Chan & Co., as the Company's independent registered public accounting firm, (4) authorized the Company's 2013 Equity Incentive Plan, (5) approved, on an advisory basis, the compensation of the Company's named executive officers, and (6) indicated "Every Three Years" as the desired frequency of future advisory vote on executive compensation. The Company has decided, in light of that vote, that the Company will include a shareholder vote on the compensation of executives in its proxy materials every three years. About China Ceetop.com Shenzhen, China-based China Ceetop.com, Inc., is an Oregon- registered corporation. Before 2013 the company owned and operated the online retail platform, http://www.ceetop.com/ Due to excessive competition in online retail, the Company has transformed itself into an integrated supply chain services provider, and focuses on Business to Business "B to B" supply chain management and related value-added services among enterprises. The Company' balance sheet at June 30, 2013, showed $3.5 million in total assets, $4.0 million in total liabilities, and a stockholders' deficit of $463,482. Going Concern Uncertainty "For the year ended Dec. 31, 2012, our independent auditors, in their report on the financial statements, have indicated that the Company has experienced recurring losses from operations and may not have enough cash and working capital to fund its operations beyond the very near term, which raises substantial doubt about our ability to continue as a going concern. Management has made a similar note in the financial statements. As indicated herein, we must raise capital for the implementation of our business plan, and we will need additional capital for continuing our operations. We do not have sufficient revenues to pay our expenses of operations. Unless the Company is able to raise working capital, it is likely that the Company either will have to cease operations or substantially change its methods of operations or change its business plan," the Company said in its quarterly report for the period ended June 30, 2013. ========= I N D I A ========= AAKASH GLOBAL: CARE Assigns 'BB' Rating to INR18cr LT Bank Loans ---------------------------------------------------------------- CARE assigns 'CARE BB' and 'CARE A4' ratings to the bank facilities of Aakash Global Foods Private Limited. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long-term Bank Facilities 18.00 CARE BB Assigned Short-term Bank Facilities 0.05 CARE A4 Assigned Rating Rationale The ratings assigned to the bank facilities of Aakash Global Foods Private Limited are primarily constrained on account of its ongoing predominantly debt-funded capex, modest scale of operations in a highly competitive food processing industry and susceptibility of its profit margins to the volatile raw material prices. The ratings, however, draw strength from the experience of the promoters, the established presence with a strong marketing and distribution network and comfortable solvency and liquidity indicators. The ability of AGF to successfully implement its ongoing capex without any cost and time overrun along with an increase in its scale of operations and profitability will be its key rating sensitivities. Established in 1992, AGF is promoted by Mr. Rajneesh Gupta and Mr. Rajesh Gupta, both having an industry experience of 20 years and 12 years, respectively. AGF is engaged in the manufacturing of sweets, namkeens and sells it under the brand name 'Aakash Namkeen'. Its manufacturing unit is located at Indore (Madhya Pradesh) and has an installed capacity of manufacturing 12 metric tonnes per day (MTPD). AGF has received ISO certification for receiving, sorting, grinding, mixing, frying, packaging and dispatch of namkeens and sweet (sohan papdi). Furthermore, it has received a manufacturer license from Food Safety and Standards Authority of India under the Food and Safety Standards Act, 2006. During FY13 (provisional; refers to the period April 1 to March 31), AGF registered a total income of INR30.28 crore and a PAT of INR1.74 crore as against a PAT of INR1.11 crore in FY12. AJAY PLASTIC: CARE Rates INR9cr Long-Term Bank Loans at 'BB+' ------------------------------------------------------------- CARE assigns 'CARE BB+' rating to the bank facilities of Ajay Plastic Industries. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long-term Bank Facilities 9 CARE BB+ Assigned The rating assigned by CARE is based on the capital deployed by the proprietor and the financial strength of the firm at present. The rating may undergo change in case of the withdrawal of capital or the unsecured loans brought in by the proprietor in addition to the financial performance and other relevant factors. Rating Rationale The rating assigned to the bank facilities of Ajay Plastic Industries is constrained by its small scale of operations, leveraged capital structure, susceptibility of margins to the volatility in the raw material prices and exposure to foreign exchange fluctuation risk. The rating also factors in the high level of intergroup transactions. The rating, however, is supported by the experienced promoters and management team, long track record of operations, established brand name and benefits derived from being a part of a large group. The ability of the firm to improve its scale of operations and capital structure are the key rating sensitivities. API is a proprietorship firm incorporated in 1974. It is a part of the Action Group that has been present in the footwear business for about four decades. The group has different entities for different brands and is headed by different family members. API is owned by Mr. Naresh Aggarwal. API is engaged in the manufacturing of PVC footwear, which is sold under the "Micro" brand. API has two manufacturing facilities located at Delhi and Bahadurgarh, having a combined installed capacity of manufacturing 35 lakh pairs of shoes per annum. API registered a PAT of INR2.42 crore on a total income of INR23.51 crore in FY12 (refers to the period April 1 to March 31). During FY13, based on provisional results, the firm has reported a PAT of INR2.50 crore on a total income of INR30.90 crore. ARTEDZ FABS: CARE Rates INR16.35cr Long-Term Loans at 'B' --------------------------------------------------------- CARE assigns 'CARE B' rating to the bank facilities of Artedz Fabs Private Limited. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long-term Bank Facilities 16.35 CARE B Assigned Rating Rationale The rating assigned to the bank facilities of Artedz Fabs Private Limited is constrained by its small scale of operations, highly leveraged capital structure, weak debt coverage indicators and project execution risk. The rating is further constrained by AFPL's working capital intensive nature of operations, volatile raw material prices and presence in highly fragmented industry with high competition from organized and unorganized sector. The above constrains far outweigh the benefit derived from the vast experience of promoters in the textile business and their financial support in past. The ability of AFPL to complete the ongoing capex without any time and cost overrun and subsequently achieve the envisaged revenue and profitability amidst increasing competition along with efficient management of working capital cycle are the key rating sensitivities. Incorporated in 2006, AFPL has been into manufacturing of cotton fabric for shirting, wherein the company procures cotton yarn from the domestic market and subsequently processes it through undertaking partial manufacturing process at its rented premises and balance through outsourcing. Prior to FY12, the company operated from its own premises at Bhiwandi; however in FY12, the company's factory building collapsed and thereby the company had to follow the aforesaid model for operations. Nevertheless, the company is re-setting up its factory building, which is likely to commence commercial production by December 2013. As per FY12 results (FY refers to period April 01 to March 31), AFPL reported total operating income INR25.17crore (up by 18% vis- a-vis FY11), however incurred heavy loss on account collapse of factory building in Bhiwandi. As per provisional FY13, AFPL has earned revenue of INR27.81 crore. BHAGWATI KRIPA: CARE Assigns 'BB+' Rating to INR11.73cr Loans ------------------------------------------------------------- CARE assigns 'CARE BB+' and 'CARE A4' ratings to the bank facilities of Bhagwati Kripa Paper Mills Private Limited. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long term Bank Facilities 11.73 CARE BB+ Assigned Short term Bank Facilities 9.00 CARE A4 Assigned Rating Rationale The ratings assigned to the bank facilities of Bhagwati Kripa Paper Mills Private Limited are primarily constrained on account of its modest scale of operations and its financial risk profile marked by fluctuating profitability margins, moderate solvency and liquidity position. The ratings are further constrained due to vulnerability of its margins to fluctuation in raw material prices, power cost as well as foreign exchange and its presence in a highly competitive and fragmented industry. The ratings, however, favorably take into account the long track record of operations and experienced management in the paper industry with stable demand indicators from end user industries, mainly packaging. Improvement in financial risk profile with improvement in scale of operations and solvency position are the key rating sensitivities. Jaipur (Rajasthan) BKPMPL was incorporated in August 2004 as a private limited company by Mr. Prem Kishore Mehra along with his family members. BKPMPL is engaged in manufacturing of kraft paper and has its manufacturing facility located at Jaipur, Rajasthan. It has an installed capacity of 40,000 Metric Tonnes Per Annum (MTPA) as on March 31, 2013. The company manufactures different varieties of kraft paper ranging from 120 to 250 Grams Per Square Meter (GSM) and Bursting Factor (BF) up to 28. The promoters have also promoted Shivam Products Private Limited (incorporated in July 1999) which is engaged in the business of manufacturing of corrugated boxes. During FY12 (refers to the period April 1 to March 31), BKPMPL reported a total income of INR50.75 crore (FY11: INR46.54 crore), with a PAT of INR0.71 crore (FY11: INR1.38 crore). As per provisional results for FY13, BKPMPL is reported total operating income of INR66.35 crore. BLUEBIRD SOFTWARE: CARE Rates INR100cr LT Bank Loans at 'BB-' ------------------------------------------------------------- CARE assigns 'CARE BB-' ratings to the bank facilities of Bluebird Software Pvt. Ltd. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long term Bank Facilities 100 'CARE BB-' Assigned Rating Rationale The rating of Bluebird Software Pvt. Ltd. is constrained by high project execution risk with a significant portion of construction still pending, substantial offtake risk associated with the ongoing project, high project gearing ratio of 5.67x and inherent risks associated with the real estate industry. The rating, however, derives strength from the experienced and resourceful promoters of BSPL, approvals in place for the project and premium location of the ongoing commercial project. Going forward, timely execution of the project and achievement of desired lease rentals and occupancy levels would be the key rating sensitivities. Incorporated in 2004, Bluebird Software Private Limited is a Delhi-NCR based real estate development company. BSPL later became part of Nimitaya group in 2007 after it was taken over by its current directors. The group is primarily involved in real estate development and hospitality business. BSPL has developed and sold a 2 lsf commercial complex "Ecstasy I.T." in UdyogVihar, Gurgaon. BSPL is now developing another commercial complex "I.T. Park" in UdyogVihar, Gurgaon on a land measuring 2 acres with a developable area of 2.76 lsf, at a cost of INR166.75 crore. As on June 30, 2013, the company has incurred INR 73.13 crore on the project, which has been primarily funded through promoter's funds in the form of unsecured loans/ equity (INR47.51 crore) and remaining through debt. As per FY13 provisional results, the company registered net profit of INR8.23 crore on total income (non-operational) of INR37.88 crore. DHANANIA RUBBER: CARE Rates INR14.15cr LT Bank Loans at 'BB-' ------------------------------------------------------------- CARE assigns 'CARE BB-' rating to the bank facilities of Dhanania Rubber Limited. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long-term Bank Facilities 14.15 CARE BB- Assigned Rating Rationale The rating is primarily constrained on account of the nascent stage of project implementation and saleability risks associated with the on-going real estate project of Dhanania Rubber Limited in the back-drop of the prevailing sluggish scenario and inherent risks associated with the cyclical real estate industry. The rating, however, favorably takes into account DRL being part of the Ruchi group who has an established track record in the agro commodity business and experience in the real estate industry. The ability of DRL to successfully complete its on-going project within the envisaged cost and time parameters, along with the timely receipt of booking advances and sale of units at the envisaged price are the key rating sensitivities. Furthermore, the size and funding profile of future projects, if any, shall also remain crucial. DRL, a closely-held public limited company, was originally incorporated in March 1976 by the Kolkata-based Dhanania family to manufacture rubber and rubber-related products. However, DRL did not have any manufacturing operations since the past 10 years as the plant was located near the residential area of Kolkata city where environmentally hazardous businesses like rubber manufacturing were not allowed by the Pollution Control Board. Hence, DRL had to discontinue its rubber manufacturing operations. Subsequently in FY12 (refers to the period April 1 to March 31), the Shahra family of Indore (promoters of the Ruchi group) acquired 100% shareholding of DRL from the erstwhile promoters to develop a real estate project after dismantling of the plant. In January 2013, DRL launched a residential project named 'Active Greens' (AG) on the said land comprising 100 units of 2/3 BHK with a saleable area of 1.41 lakh sq ft (lsf). The total cost of the project is envisaged at INR32.91 crore and it is expected to be completed by June 2015. As on August 25, 2013, DRL had incurred a total cost of INR6.55 crore on the project. INVESTMENT & PRECISION: CARE Rates INR40.40cr Bank Loans at 'BB+' ----------------------------------------------------------------- CARE assigns CARE BB+ and CARE A4+ ratings to the bank facilities of Investment & Precision Castings Ltd. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long-term Bank Facilities 40.40 CARE BB+ Assigned Short-term Bank Facilities 4.00 CARE A4+ Assigned Rating Rationale The ratings are constrained by the relatively small scale of operations of Investment & Precision Castings Ltd. along with its high customer concentration and linkages with the domestic automobile industry which is currently passing through a challenging demand environment. The ratings are further constrained by its working capital intensive operations with an elongated operating cycle, susceptibility to volatile raw material prices and implementation & salability risks associated with its planned capacity expansion project. The ratings, however, derive strength from the vast experience of the promoters of I&PCL in the investment castings business, established manufacturing facility and established relations with its key customers. The ratings also factor in I&PCL's moderate capital structure and debt coverage indicators. The ability of I&PCL to increase its scale of operations and improve its profitability margins, ensure greater customer & geographical diversification while retaining its key clientele and manage salability risk associated with its planned capacity expansion project after ensuring its implementation within envisaged time and cost parameters would be the key rating sensitivities. I&PCL, engaged in the business of manufacturing investment castings, was established in April 1975. In 2004, I&PCL set up Tamboli Castings Ltd. (TCL; rated CARE BBB/CARE A3+) as an export oriented unit and its wholly owned subsidiary. In 2009, upon family partition, I&PCL Group was split into I&PCL and Tamboli Capital Ltd. as two independent companies. I&PCL has a total installed manufacturing capacity of 1500 Metric Tonne Per Annum (MTPA) of investment castings at its plant located at Bhavnagar which is predominantly being supplied to the domestic automobile industry. During FY13 (refers to the period April 1 to March 31), I&PCL reported a total operating income of INR66.16 crore (FY12: INR79.31 crore) with a PAT of INR0.42 crore (FY12: INR 2.96 crore). As per the provisional results for Q1FY14, I&PCL has reported a total operating income of INR15.53 crore with a PAT of INR0.20 crore. NIKHIL FOOTWEARS: CARE Assigns 'BB+' Rating to INR75.75cr Loans --------------------------------------------------------------- CARE assigns 'CARE BB+' and 'CARE A4+' ratings to the bank facilities of Nikhil Footwears Pvt Ltd. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long-term Bank Facilities 75.75 CARE BB+ Assigned Short-term Bank Facilities 3.00 CARE A4+ Assigned Long/Short-term Bank 20.00 CARE BB+/CARE A4+ Facilities Assigned Rating Rationale The ratings assigned to the bank facilities of Nikhil Footwears Pvt Ltd are constrained by its working capital intensive nature of the operations, susceptibility of margins to the volatility in the raw material prices and exposure to foreign exchange fluctuation risk. The ratings also factor in the high level of intergroup transactions. The ratings, however, are supported by the experienced promoters and management team, long track record of operations, established brand name and benefits derived from being part of a large group. The ability of the company to manage its working capital cycle efficiently and improve its capital structure are the key rating sensitivities. Incorporated in 1987, Nikhil Footwears Pvt Ltd is engaged is manufacturing and trading of footwear and footwear components. NFPL is a part of the Action group that has been present in footwear business for about four decades. The group has different entities for different brands and headed by different family members. NFPL is headed by Mr. Naresh Aggarwal. NFPL has five manufacturing facilities located at Kundli (three units), Delhi and Bahadurgarh having combined installed capacity of manufacturing 58 lakh pairs of shoes and 41 lakh pairs of soles per annum. NFPL sells its products under the various sub- brands of the Action group, among which "Milano" and "School Time" are the major brands used by the company. NFPL has registered a PAT of Rs 8.15 crore on a total income of INR120.38 crore in FY12 (refers to the period April 1 to March 31). During FY13, based on provisional results, the company has reported a PAT of INR7.11 crore on a total income of INR191.68 crore. SAI AARAV: CARE Rates INR7cr Long-Term Bank Loans at 'BB' --------------------------------------------------------- CARE assigns 'CARE BB' rating to the bank facilities of Sai Aarav Motors. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long-term Bank Facilities 7.00 CARE BB Assigned The ratings assigned by CARE are based on the capital deployed by the partners and the financial strength of the firm at present. The ratings may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners in additional to the financial performance and other relevant factors. Rating Rationale The rating is constrained by the nascent stage of operations of Sai Aarav Motors in the automobile dealership business with presence in a single district of Gujarat along with its constitution as a partnership firm. The rating is further constrained on account of the inherently low profitability margins, high working capital intensity of operations and its presence in a highly competitive industry with linkages to the cyclical automobile industry which is presently witnessing subdued demand. The above weaknesses far offset the benefits derived from the resourceful and experienced promoter group of Sai Aarav who has established operations in the construction sector along with experience in the auto-dealership business. Sai Aarav's ability to achieve the envisaged sales volume and profitability in a highly competitive automobile dealership business, establish a sound track record of operations, effectively manage the working capital requirements and need-based financial support from the promoter group are the key rating sensitivities. Sai Aarav is a partnership firm formed by the promoters of the Gujarat-based Ranjit Group who have also promoted Ranjit Buildcon Ltd (RBL; rated CARE A-/ CARE A1). It was formed in August2012 by Mr. Vaibhav Ranchodbhai Patel and his family members. Sai Aarav is engaged in the automobile dealership business of Nissan Motors. The showroom of Sai Aarav is located in the Mehsana district of Gujarat and fully supports 3-S services (Sales, Service and Spare- parts) and deals in all the models of Nissan. It started sales and service operations from the end of June 2013 & mid of July 2013, respectively. SEQUENT SCIENTIFIC: CARE Reaffirms 'B' Rating on INR178cr Loans --------------------------------------------------------------- CARE reaffirms the rating assigned to the bank facilities of Sequent Scientific Limited. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long-term Bank Facilities 178 CARE B Reaffirmed Short-term Bank Facilities 120 CARE A4 Reaffirmed Rating Rationale The ratings continue to be constrained by the weak financial risk profile of Sequent Scientific Ltd marked by significant losses in FY13, stretched capital structure and tight liquidity position, susceptibility of margins to volatile raw material prices and foreign exchange fluctuation and challenges of operating in highly competitive environment. Further, the ratings are constrained by the company's support to its subsidiaries/group companies by way of investment in equity, loans and advances and corporate guarantees. Nevertheless, the ratings continue to derive strength from experience of the promoters, wide product portfolio in animal and human healthcare and reputed client base. The ratings also take note of infusion of equity by the promoters during FY13 to support the business. Going ahead, the ability of the company to manage profitable operation, manage foreign exchange risk and improvement in liquidity position would remain the key rating sensitivities. In February 2007, Fraxis Lifesciences Limited, a company promoted by Mr. Arun Kumar and Mr. K.R. Ravishankar, the promoters of Strides Arcolab Limited, acquired P. I. Drugs and Pharmaceuticals Limited. Subsequently, PIDPL merged itself with its group company and the merged entity was renamed as Sequent Scientific Limited. SSL is engaged in manufacturing of APIs and formulations for animal healthcare, APIs for human healthcare, specialty chemicals and contract research and manufacturing services (CRAMS). As on March 31 2013, the company had filed 42 Drug Master Files (DMF) with another six in process of filing and 15 APIs under development. SSL is the world's largest producer of Anthelmintics and a strong player in the Veterinary API business. The company derives around 43% of its revenues from the export market and the remaining from domestic market in FY13. SSL has seven manufacturing facilities located across five locations in Karnataka, Gujarat and Maharashtra. As on March 31, 2013, SSL had nine subsidiaries and three step-down subsidiaries. During FY13, the company reported a net loss of INR54 cr (as against INR15 cr loss in FY12) on a net income of INR315.86 cr (as against INR336.9 cr in FY12). Furthermore, the company posted net loss of INR9.3 cr in Q1 FY14 on a total income of INR113.24 cr. SERMAN INDIA: CARE Assigns 'B+' Rating to INR3.5cr LT Bank Loans ---------------------------------------------------------------- CARE assigns 'CARE B+' and 'CARE A4' ratings to the bank facilities of Serman (India) Road Makers Private Limited. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long-term Bank Facilities 3.50 CARE B+ Assigned Long-term/Short-term Bank 10.00 CARE B+/CARE A4 Facilities Assigned Rating Rationale The ratings assigned to the bank facilities of Serman (India) Road Makers Private Limited are constrained primarily on account of its small scale of operation and presence in the competitive construction industry coupled with its financial risk profile marked by declining profitability, weak liquidity position and elongated working capital cycle. The ratings are further constrained by geographic and client concentration risk. These constraints far offset the benefits derived from the experienced promoters in the construction industry and its moderate order book position & reputed clientele coupled with the moderate capital structure and debt coverage indicators. SIRPL's ability to timely execute the existing orders in hand and strengthening of order book position along with an improvement in profitability and better working capital management are the key rating sensitivities. Bhopal-based SIRPL was incorporated by Mr. Ishnarayan Sharma in 1988. Presently, his brothers, Mr. Deepak Sharma and Mr. Rakesh Sharma, assist him in the day-to-day operations. SIRPL is registered as a 'Class A' contractor with the Public Work Department of Madhya Pradesh (highest on a scale of A to E) and secures all the contracts through open bidding process. The company is in the business of construction, maintenance and improvement of roads and has an order book of INR43.27 crore as on August 20, 2012. The order book consisted of 21 projects, majority of which were awarded by the Public Works Department (PWD) of Madhya Pradesh. As per the provisional results for FY13 (refers to the period April 01 to March 31), SIRPL reported a total operating income (TOI) of INR17.46 crore (FY12: INR15.11 crore) and Profit after Tax (PAT) of INR0.69 crore (FY12: INR0.90 crore). S.P.R CONSTRUCTIONS: CARE Assigns 'BB-' Rating to INR2.25cr Loans ----------------------------------------------------------------- CARE assigns 'CARE BB-/ CARE A4' ratings to the bank facilities of S.P.R Constructions. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long-term Bank Facilities 2.25 CARE BB- Assigned Short-term Bank Facilities 2.75 CARE A4 Assigned Long/Short-term Bank 10.00 CARE BB-/CARE A4 Facilities Assigned The ratings assigned by CARE are based on capital deployed by the partners and the financial strength of the firm at present. The ratings may undergo a change in case of withdrawal of capital or the unsecured loans brought in by the partners in addition to the financial performance and other relevant factors. Rating Rationale The ratings assigned to the bank facilities of S.P.R Constructions are constrained by its limited track record of operations with working capital intensive nature of business, the firm's concentrated order book and its constitution as a partnership firm with an inherent risk of withdrawal of capital. However, the above constraints are partially offset by the experience of the partners in the industry, comfortable capital structure with moderate profitability margins and healthy order book position. The ability of the firm to infuse capital and increase its scale of operations with improvement in the profitability margins will remain as the key rating sensitivities of the firm. S.P.R Constructions is a partnership firm started in 2005 by Mr. S Ram Mohan Reddy, Managing Partner. SPRC is a small-size construction contractor with main focus on electrical works involving construction/erection of sub-stations and transmission lines. SPRC has three divisions namely Transmission lines, Substation erections and civil works, major projects implemented by SPRC during FY13 were sub contract works. During FY13 (refers to the period April 1 to March 31), SPRC reported a net profit of INR1.61 crore on a total operating income of INR34.32 crore as against a net profit of INR1.42 crore on a total operating income of INR31.13 crore in FY12. VATSA AUTOMOBILES: CARE Rates INR10.69cr Bank Loans at 'B+' ----------------------------------------------------------- CARE assigns 'CARE B +' rating to the bank facilities of Vatsa Automobiles Private Limited. Amount Facilities (INR crore) Ratings ----------- ----------- ------- Long-term Bank Facilities 10.69 CARE B+ Assigned Rating Rationale The rating assigned to the bank facilities of Vatsa Automobiles Private Limited is primarily constrained by the ongoing project execution and stabilization risk, pricing constraints and margin pressure arising out of competition from the various auto dealers in the market. The rating is further constrained by the lack of experience of the promoters in the automobile dealership business, its linkage to the fortunes of Mahindra & Mahindra Ltd, existence of contract renewal risk and working capital intensive nature of business. The rating, however, derives strength from the benefits arising out of owned premises, integrated nature of business and sole authorized dealership of MML in Bhagalpur (Bihar) for the full range of its products. The ability of VAPL to successfully complete the project and achieve the projected turnover and profitability margins would be the key rating sensitivities. Incorporated on April 10, 2012, Bhagalpur-based (Bihar) Vatsa Automobiles Pvt Ltd is promoted by Mr. Shailesh Singh with his wife, Ms. Kiran Singh, and son, Mr. Chandra Prakash. VAPL will operate in Bhagalpur and nearby region as an authorized dealer of MML for its vehicle segment. The company is an authorised dealer of MML for the full range of its products where it will also provide repair and refurbishment services. Singh Construction Pvt Ltd is an associate company of VAPL engaged in the construction and maintenance of roads in the different regions of Bihar. Project details The company is setting up a showroom for the dealership business and is also developing a workshop and one stock yard in the same premises. The total envisaged cost of the project is INR10.17 crore financed through term loan of INR1.99 crore and equity capital of INR8.18 crore (debt equity ratio of the project is 0.24x). The commercial operation of the company is expected to start from September 2013. The financial closure for the project has been achieved. Till July 31, 2013, the company has incurred about INR5.87 crore financed through an equity capital of INR3.98 crore and debt of INR1.89 crore. * High Borrowing Costs to Constrain Margins for Indian Companies ---------------------------------------------------------------- Moody's Investors Service says that higher funding costs for rated Indian corporates will put pressure on margins, particularly for companies already challenged by slower growth prospects. Furthermore, depreciation of the Indian Rupee will lead to revaluation of debt issued in US dollars, which in turn could put pressure on some covenants. Moody's also highlights that the 14 non-financial companies that it rates in India have combined debt of INR2.2 trillion ($32 billion) maturing in the fiscal year ending March 2014 (FY 13), out of which over 50% is denominated in foreign currency. However, Moody's believes that these companies will be able to refinance maturing debt from the domestic banking system, as well as the international capital markets. "We expect domestic banks to continue rolling over the companies' credit facilities and these companies will continue to have access to funding from international banks and capital markets, given that these firms are among the largest in their respective industries, with strong brand names and long histories," says Alan Greene, a Moody's Vice President and Senior Credit Officer. "These companies also maintain good relationships with domestic banks and have solid track records of accessing international funding," adds Greene. Greene is a co-author of a just-released Moody's report titled: "Indian Corporates: Higher Borrowing Costs, Weak Rupee Will Pressure Indian Corporate Credit Metrics". Moody's report says interest rates - both on rupee and foreign currency borrowings - are likely to increase. Interest rates in India are on the rise given the measures by the Reserve Bank of India to tighten liquidity in order to bolster the rupee, which has fallen to historic lows against the US dollar. The borrowing cost for the foreign currency debt is also on the rise in light of the US Federal Reserve's decision to taper its bond-buying programme. Nonetheless, Moody's report says that the firms can manage their increasing financing costs, because cash flows should be sufficient to service the higher interest costs. However, their credit metrics -- particularly interest coverage and debt service coverage -- will deteriorate, as interest costs rise, which will reduce headroom under the financial covenants of some companies. The report also says that while companies with debt denominated in foreign currencies will report an increase in total leverage as a result of the depreciating rupee, these firms have mitigated some of their foreign exchange exposures. Some companies, for instance, use their debt denominated in foreign currencies to invest in overseas operations, which in turn are a natural hedge because the foreign currency debt is serviced by the profits of the foreign operations. The rated companies with little or no foreign operations are primarily engaged in basic commodities and generate revenues in US dollars or in currencies linked to US dollars. However, Moody's report points out that state-owned downstream oil marketing companies are most affected by the depreciating rupee, because while their revenues are linked to the US dollar, their EBITDA margins are thin, at between 3% and 5%. They are also highly leveraged. "Rupee depreciation will increase the state-owned downstream oil marketing firms' borrowings, as they revalue their existing foreign currency borrowings upward and require more working capital to fund increased commodity costs and under-recoveries," says Vikas Halan, a Moody's Vice President -- Senior Analyst. For business process outsourcing companies, the report says their large cash balances help fund any shortfall in working capital requirements and support near-term refinancing needs. These firms' low near-term maturities also help insulate them from any tightening in liquidity levels. ========= J A P A N ========= GK MLOX3: Fitch Affirms Rating on Class D Notes at 'CC' ------------------------------------------------------- Fitch Ratings has upgraded GK MLOX3's class C notes and affirmed the class D notes, all due June 2015. The transaction is a Japanese multi-borrower type CMBS securitisation. The rating actions are as follows: JPY1.7bn* class C notes upgraded to 'BBsf''from 'Bsf''; Outlook Stable JPY1.78bn* class D notes affirmed at 'CCsf''; Recovery Estimate revised to 45% from 35% *as of Sept. 11, 2013 Key Rating Drivers The upgrade of the class C notes reflects a substantial principal repayment of the underlying loan and Fitch's view that full redemption of the notes prior to the legal final maturity is more likely than it was a year ago. Since the previous rating action in September 2012, three of nine properties backing the remaining defaulted loan have been sold at higher values than Fitch had expected. All of these contributed to a substantial repayment of the transaction, with class B being fully redeemed in February 2013. Fitch believes most of the remaining properties are likely to be sold within a year and expects the associated sale proceeds to be sufficient to repay the class C notes in full. Fitch has revised downwards its net cash flow estimates for two out of the six remaining collateral properties, reflecting the collateral properties' recent weaker-than-expected performance. However, this has been more than offset by the repayment so far. The affirmation of the class D notes reflects Fitch's view that principal loss remains probable for this class. Rating Sensitivities An unexpected delay in workout activities, which could push back the full redemption of the class C notes closer to their legal final maturity, may result in negative rating action on the notes. The rating of the class D notes is sensitive to the sales values of the remaining properties, with negative rating action likely as legal final maturity approaches. Fitch assigned ratings to this transaction in September 2007. The transaction was initially a securitisation of five loans backed by 25 property trust beneficiary interests. It is currently backed by one defaulted loan, which in turn is backed by six properties. ==================== N E W Z E A L A N D ==================== ALLIED FARMERS: Escapes Insolvency After Unit Raises NZ$600K ------------------------------------------------------------ Paul McBeth at BusinessDesk reports that Allied Farmers, which is slowly rebuilding from a disastrous takeover of the Hanover and United Finance loan books, has staved off insolvency after raising NZ$600,000 in a bond issue, almost half of which was bought by interests associated with the chairman Gary Bluett. According to the report, the Hawera-based company's Allied Farmers Rural subsidiary raised the debt, with NZ$250,000 coming from chairman Gary Bluett and an associated person, to fund a repayment plan with the Inland Revenue Department over a NZ$4.2 million unpaid tax bill. Mr. Bluett and his associated person "only agreed to participate as funders after the terms of the bonds were set and it became apparent there would be a shortfall in the amount AFRL could raise from the issue of the Bonds," BusinessDesk relates citing an NZX waiver notice allowing the bond issue to take place without shareholder approval. Separately, BusinessDesk reports that Allied Farmers has also reached a confidential settlement with a creditor who had called in a NZ$540,000 loan, plus interest. "Some of the proceeds of the bond issue have been used, together with a draw down on funds from an existing funding facility with its secured lender, Crown Asset Management, to fund the initial instalment of the repayment plan," Mr. Bluett said in a statement, BusinessDesk relates. The firm announced the bond issue earlier last week, seeking at least NZ$500,000 and as much as NZ$1 million to keep itself alive, the report notes. The bonds, paying interest of 12 percent, rank behind Allied Farmers' debt to Crown Asset Management Ltd, the unit tasked with clawing back funds used in the government's deposit guarantee scheme, and are repayable on Aug. 31 2014, BusinessDesk reports. About Allied Farmers Based in New Zealand, Allied Farmers Limited (NZE:ALF) -- http://www.alliedfarmers.co.nz/-- is engaged in livestock, real estate, finance, wool brokering and manufacturing (meat and timber). Rural Services comprise livestock, merchandise and real estate operations. The Company's Rural Services activities are carried out in Taranaki, Waikato, King Country and Manawatu. Its Financial Services activities are carried out by Allied Nationwide Finance Limited in Auckland, Wellington and Christchurch. Timber processing comprises the Company's discontinued sawmilling operations. nzherald.co.nz said the future of Allied Farmers is in doubt after its accounts revealed it needs to sell property, collect money owed to it, and reach an agreement with its rural creditors in order to survive as a going concern. The rural services business, which acquired the assets of Hanover and United Finance in December 2009, revealed its position in half-year accounts filed to the NZX on March 26, 2012. Allied Farmers Limited reported an unaudited loss of NZ$14.1 million for the year ended June 30, 2012, compared with NZ$40.9 million in 2011. A significant part of this loss, NZ$10.3 million (last year NZ$34.1 million), largely relates to the further impairment of assets acquired from Hanover and United Finance. The Hawera-based company made a loss of NZ$4.4 million in the year to June 30, 2013. =============== P A K I S T A N =============== PAKISTAN STEEL: Likely to Shut Operations ----------------------------------------- Razi Syed at Daily Times reports that the Pakistan Steel Mills (PSM) is on the verge of closure on more than one count, critics on State Owned Enterprises (SOEs) showed on September 14. Daily Times relates that the bailout package of more than PKR3.0 billion plus for PSM by the federal government has yet to come in real. The report says the employees are waiting for three months salaries and above all production capacity reduced to hardly 9.0 percent. In such a situation a white elephant cannot stand long and possible fall for liquidation, the report notes. According to Daily Times, this would be the second SOE, after Pakistan International Airlines (PIA) that the government wanted to close down in order to save PKR36 billion. The PSM project was set up in 1971 to build an integrated government-owned steel mill near Karachi. ===================== P H I L I P P I N E S ===================== UNITRUST DEVELOPMENT: PDIC to Continue Payments Until October 7 --------------------------------------------------------------- The Philippine Deposit Insurance Corporation (PDIC), the Liquidator of the closed Unitrust Development Bank (Unitrust), announced that it will continue to release cash payments to the depositors and creditors of Unitrust until Oct. 7, 2013. The cash payments represent the partial settlement for the claims of the Unitrust depositors and creditors against the assets of the bank. The PDIC started cash payments on Sept. 9, 2013. The payments should be claimed personally by the depositors and creditors or their duly authorized representative at the Unitrust Development Bank Exchange Corner located at the Ground Floor, Exchange Corner Complex Condominium, Exchange Corner Building, V.A. Rufino St. corner Esteban and Bolanos Sts., Legaspi Village, Makati City, on their designated schedule. The schedule of release of payment and requirements are posted in the PDIC website, www.pdic.gov.ph. Meanwhile, the Liquidation Court has set another hearing on Friday, September 13, 2013 at 8:30 a.m. at the Regional Trial Court of Makati City, Branch 59, to discuss the content of the Release, Waiver and Quitclaim, With Undertaking to be accomplished by the depositors and creditors of Unitrust. The Liquidation Court had earlier directed the Unitrust depositors and creditors "to agree to the proposed allocations of their interests in the real properties as payment equivalent to 38% of their respective claims" and "to execute their respective quitclaims and waivers once all their claims have been fully-settled." In the hearing on September 10, 2013, the PDIC said that given that Unitrust has sufficient cash, claims of all depositors and creditors can be settled fully in cash. The bank also has surplus assets of P156 million after settlement of all claims of depositors and creditors. Mr. Francis Yuseco, Jr., Unitrust stockholder, is opposing the full release of cash payment to the depositors and creditors if they do not sign a waiver on their claims over the closed banks' surplus dividends. A surplus dividend is compensation in the form of damages suffered due to the closure of the bank. This is computed at the rate of 12% per annum from the date of closure, in accordance with the Civil Code. Surplus dividends are declared on excess assets after payment of all claims of depositors and creditors. PDIC said that waiver on the part of the depositors and creditors over the surplus dividends is voluntary. The PDIC stressed that providing depositors and creditors accurate information on the financial condition of the closed Unitrust is critical in making informed decisions; and serves their best interests in order to maximize the recovery of their claims in the closed bank. This is because waiving one's right to surplus dividends is a decision that the depositors and creditors have to make on their own. Unitrust was ordered closed by the Monetary Board on Jan. 4, 2002, and is now under the liquidation of the Philippine Deposit Insurance Corporation (PDIC). As of the date of closure, the bank was owned by Pedro Montanez, G. Universal Co., Ltd., Leopoldo Valcarcel, Francis Yuseco, Jr., Minamoto Saiken Kaishu Co., Ltd., and others. However, there were reports that Unitrust was owned by Genta Ogami, a Japanese who was linked to a company called G. Cosmos. ==================== S O U T H K O R E A ==================== * Korean Banks Likely to Remain Under Pressure, Fitch Says ---------------------------------------------------------- Fitch Ratings says Korea's banks are likely to remain under pressure as domestic economic growth moderates, their customer base ages and new regulations squeeze their margins and fees. That said, the outlook for bank ratings remains stable. In addition, Korean banks' customers in the shipbuilding, shipping and construction sectors face rising risks of collapse while banks will have to shoulder higher costs as the government demands they improve accountability and do more to support failing companies, Fitch says in a Special Report on the Korean banking system. Fitch says the funding environment for Korean banks will remain stable. The agency does not expect significant funding problems for Korean banks when the U.S. Federal Reserve starts to withdraw its monetary stimulus, assuming that the Bank of Korea and global central banks raise interest rates in line with their economic recoveries. ================ S R I L A N K A ================ BANK OF CEYLON: Fitch Assigns 'BB-' Issuer Default Ratings ---------------------------------------------------------- Fitch Ratings Lanka has assigned Bank of Ceylon's (BOC; BB- /Stable) proposed subordinated debentures of up to LKR8bn an expected National Long-Term rating of 'AA(lka)(EXP)'. The debentures are to be listed on the Colombo Stock Exchange. BOC expects to use the proceeds to strengthen the bank's regulatory Tier 2 capital base and reduce asset and liability maturity mismatches. The final rating is pending final documents that confirm information already received, including details about the amount and tenor. A full rating breakdown is provided at the end of this commentary. The proposed debentures are rated one notch below BOC's National Long-Term Rating of 'AA+(lka)' to reflect their gone-concern loss- absorption quality in the event of a liquidation, in line with Fitch's criteria for rating such securities. Key Rating Drivers BOC's Long-Term Rating is driven by the government of Sri Lanka's high propensity but moderate ability to provide support to the bank under extraordinary circumstances. In Fitch's view, the state's high propensity to support BOC stems from the bank's systemic importance as the largest bank in the country, its quasi- sovereign status, its role as a key lender to the government and full government ownership. The state's moderate ability to provide timely support to BOC is reflected in the 'BB-'/Stable rating. Rating Sensitivities Any change in Sri Lanka's rating or the perception of state support to BOC could result in a change in BOC's National Long- Term Ratings. The subordinated debt rating will move in tandem with the Long-Term Ratings. Full list of BOC's ratings: Long-term Foreign- and Local-Currency Issuer Default Ratings: 'BB- '; Outlook Stable Viability Rating: 'b+' Support Rating: '3' Support Rating Floor: 'BB-' USD senior unsecured notes: 'BB-' National Long-Term rating: 'AA+(lka)' ; Outlook Stable Outstanding subordinated debentures: 'AA(lka)' =============== X X X X X X X X =============== * Moody's Expects Low High-Yield Corporate Defaults in AP Area -------------------------------------------------------------- Moody's Investors Service says the high-yield default rate for non-financial corporates in Asia Pacific (ex-Japan) will end the year at a low 1.6%; a level which is lower than the forecast 2% made in February, based on Moody's Credit Transition Model (CTM). "The predicted default rate anticipates a continued narrowing of the high yield spread and stability of the high yield corporate portfolio," says Clara Lau, a Moody's Group Credit Officer. Lau was speaking on the just-released Moody's report titled, "High-Yield Corporates in Asia Pacific (ex-Japan) Expected to End 2013 with Low Default Rate." Moody's report says the proportion of ratings with negative outlooks fell significantly to 22% in August 2013 versus 37% at end-2012. "The low estimated default rate of 1.6% translates into one or two defaults for all of 2013," says Lau. "The forecast is also based on our assessment that if quantitative easing in the US recedes, it will be done in a measured manner and will not materially disrupt credit markets," comments Lau. 'We expect quantitative easing programs in the US to continue into 2014,' adds Lau. Furthermore, the low estimated default rate reflects Moody's assumptions of continued gradual growth for advanced economies, and sustained but slower growth for major emerging economies such as China. Moody's report also says that the average rating of companies in Moody's high yield portfolio remained at B1/B2 as of end-August; similar to the level as of end-2012. Moody's report points out that in terms of rating transitions between August 2012 and July 2013, Asian investment grade corporates generally exhibited higher rating stability when compared with speculative grade issuers. In addition, investment grade firms in Asia displayed lower rating volatility than their global peers. Moreover, while the rating trend for global corporates is generally negative, the opposite was true for Asian firms. Moody's report also says there were more multi-notches rating movements for global corporates than for Asian firms, across all rating categories. ********* Tuesday's edition of the TCR-AP delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR-AP editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Tuesday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR-AP constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR-AP editor holds some position in the issuers' public debt and equity securities about which we report. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR-AP. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Friday's edition of the TCR-AP features a list of companies with insolvent balance sheets obtained by our editors based on the latest balance sheets publicly available a day prior to publication. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter-Asia Pacific is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C., USA. Valerie U. Pascual, Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez, Julie Anne L. Toledo, Frauline S. Abangan, and Peter A. Chapman, Editors. Copyright 2013. All rights reserved. ISSN: 1520-9482. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. TCR-AP subscription rate is US$775 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000 or Nina Novak at 202-241-8200. *** End of Transmission ***