/raid1/www/Hosts/bankrupt/TCRAP_Public/200511.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, May 11, 2020, Vol. 23, No. 94
Headlines
A U S T R A L I A
CARRIAGEWORKS: Sydney Opera House May Step In to Take Over Venue
CONSTRUCTIVE RECRUITMENT: Second Creditors' Meeting Set for May 18
FIVE STAR TRUST 2019-1: Fitch Puts BB+ on F Debt on Watch Negative
FLIGHT CENTRE: Sells Melbourne Headquarters for AUD62 Million
GO TO COLLECTION: Christchurch Madam Woo to Shut Doors Permanently
ILLWARRA HAWKS: Second Creditors' Meeting Set for May 18
LA TROBE 2020-1: S&P Assigns Prelim. B Rating on Cl. F Trusts
LIBERTY FUNDING 2020-1: Moody's Rates Class F Notes '(P)B1'
LNG INTERNATIONAL: First Creditors' Meeting Set for May 18
MICHAEL SKLOVSKY: Second Creditors' Meeting Set for May 15
SECURE INVESTMENTS: ASIC Obtains Asset Freezing Orders
C H I N A
DAFA PROPERTIES: S&P Alters Outlook to Negative & Affirms 'B' ICR
YIHUA ENTERPRISE: Moody's Cuts CFR to Ca, Will Withdraw Ratings
I N D I A
ASIAN LAKTO: ICRA Withdraws 'B+' Rating on INR13cr LT Loan
ASIANLAK HEALTH: ICRA Withdraws 'B+' Ratings on INR10cr Loans
AZAM RUBBER: ICRA Removes 'D' Rating From Not Cooperating
BANASHANKARI AGRO: ICRA Moves B+ Rating to Not Cooperating
BHALARA COTTON: ICRA Withdraws 'D' Rating on INR22cr Loan
COASTAL ENERGEN: ICRA Reaffirms 'D' Rating on INR6,113.79cr Loan
DEV COTTON: ICRA Keeps B on INR10.46cr Bank Loans in NonCooperating
FAROOQ CONSTRUCTIONS: ICRA Moves D Debt Rating to Not Cooperating
FUTURE CORPORATE: ICRA Lowers Rating on INR226.67cr Loan to D
GANESH INDUSTRIES: ICRA Keeps B+ on INR10cr Debt in Not Cooperating
LAXMINARAYAN INDUSTRIES: ICRA Cuts Rating on INR7.2cr Loans to B+
NAVDANYA ENTERPRISES: ICRA Moves B Debt Ratings to Not Cooperating
PRABHA ENGINEERS: ICRA Keeps B on INR5cr Loans in Not Cooperating
QURESHI INTERNATIONAL: ICRA Reaffirms B+ Rating on INR9.9cr Loan
RSAL STEEL: ICRA Keeps D on INR277cr Bank Loans in Not Cooperating
SP SUPERFINE COTTON: ICRA Keeps 'D' Debt Rating in Not Cooperating
SRINIVASA EDUCATIONAL: ICRA Assigns B+ Rating to INR6.07cr Loan
SUDAMO IMPEX: ICRA Lowers Rating on INR5.50cr Loan to B+
SUDARSHAN TEXTILES: ICRA Lowers Rating on INR3.04cr Loan to B+
I N D O N E S I A
STAR ENERGY: Fitch Affirms BB- on $580MM Senior Secured Notes
N E W Z E A L A N D
[*] Fitch Takes Action on 11 Tranches From 2 Avanti Deals
P H I L I P P I N E S
ABS-CBN CORP: Expects to Lose Up to PHP35MM Daily When Off Air
HALIFAX HOTEL: Marco Polo Davao to Close Doors by June 15
S I N G A P O R E
SINGTEL: Appoints Provisional Liquidator to Video Streaming Unit
ZENROCK COMMODITIES: Involved in Dishonest Deals, HSBC Says
ZENROCK COMMODITIES: Placed Under Judicial Management
- - - - -
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A U S T R A L I A
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CARRIAGEWORKS: Sydney Opera House May Step In to Take Over Venue
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Elizabeth Fortescue at The Art Newspaper reports that the Sydney
Opera House confirmed it had been approached by the government of
New South Wales (NSW) to consult on the long-term sustainability of
Carriageworks, the contemporary arts exhibition and performance
venue in Sydney which went into voluntary administration on
May 4.
"We understand that the NSW Government will engage widely with arts
and cultural industry leaders," the report quotes an Opera House
spokesperson as saying. "The Opera House will provide its support
in this process at the appropriate time, once the outcomes of the
voluntary administration process are known."
Carriageworks was "as an important cultural venue, particularly at
this most difficult time for the arts", the Opera House
spokesperson said.
The Art Newspaper notes that Carriageworks went into voluntary
administration under the pressure of six months' worth of cancelled
events due to the impact of the coronavirus. The cancelled events
include the Sydney Writers Festival and Mercedes-Benz Fashion Week
Australia.
Accounting firm KPMG Australia's Phil Quinlan and Morgan Kelly were
appointed Voluntary Administrators to Carriageworks. They said
Carriageworks had been significantly impacted by the suspension of
its operations and artistic projects due to current regulations
regarding public gatherings, the report relays.
"We will be working closely with Carriageworks' executives and
stakeholders to try and secure its future," the report quotes Mr.
Quinlan as saying.
"We will be exploring the possibility of a Deed of Company
Arrangement to stabilise Carriageworks' financial position and
allow it to continue its important role for Australian arts and
culture. All options are on the table for consideration."
According to the report, Carriageworks attracts around a million
visitors each year and is recognised as one of Sydney's most
vibrant venues. It is a former railway workshop and factory where
government locomotives were manufactured and maintained.
Carriageworks was redeveloped as an arts venue in 2007. It receives
25% of its funding from the NSW Government and generates the rest
through venue hire, its popular weekend food markets, and ticket
sales. It is also home to a variety of Australian performing arts
companies including Sydney Chamber Opera.
Blair French, formerly director of curatorial and digital at the
Museum of Contemporary Art Australia, took over as Carriageworks'
chief executive in late 2019 following the departure of inaugural
head Lisa Havilah, recalls The Art Newspaper. Ms. Havilah now heads
Sydney's Museum of Applied Arts and Sciences.
Carriageworks annually plays host to the international art fair,
Sydney Contemporary, whose director Barry Keldoulis told The Art
Newspaper he was "reasonably" confident the fair will still go
ahead at the venue this year. Going into voluntary administration
was a "positive" for Carriageworks, which will emerge financially
stronger as a result, Mr. Keldoulis said.
"All the international galleries (that participate in Sydney
Contemporary) have said it's the best venue for an art fair they
have ever been to," Mr. Keldoulis told The Art Newspaper.
At last year's Sydney Contemporary, 95 galleries from 34 countries
showed the work of 450 artists.
Carriageworks has its own curators and has previously staged large
exhibitions of the work of artists such as Christian Boltanski, El
Anatsui and Nick Cave. Russian protest group Pussy Riot has also
performed at the venue.
Phil Quinlan and Morgan Kelly of KPMG were appointed as
administrators of Carriageworks Limited on May 4, 2020.
CONSTRUCTIVE RECRUITMENT: Second Creditors' Meeting Set for May 18
------------------------------------------------------------------
A second meeting of creditors in the proceedings of Constructive
Recruitment Pty Ltd has been set for May 18, 2020, at 10:30 a.m. at
the offices of Jirsch Sutherland, Level 27, at 259 George Street,
in Sydney, NSW.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by May 15, 2020, at 5:00 p.m.
Trent Andrew Devine and Peter John Moore of Jirsch Sutherland were
appointed as administrators of Constructive Recruitment on April 2,
2020.
FIVE STAR TRUST 2019-1: Fitch Puts BB+ on F Debt on Watch Negative
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Fitch Ratings has placed five tranches from two Australian RMBS
transactions on Rating Watch Negative and revised the rating
Outlook to Negative on seven tranches from three RMBS transactions.
The rating actions are driven by Fitch's expectation that
coronavirus-related disruptions are likely to affect performance in
the short to medium term.
Sapphire XV Series 2016-2 Trust
- Class D AU3FN0033387; LT A+sf; Rating Watch On
- Class E AU3FN0033395; LT A-sf; Rating Watch On
- Class F AU3FN0033403; LT BBBsf; Rating Watch On
Sapphire XVI Series 2017-1 Trust
- Class D AU3FN0036083; LT A-sf; Revision Outlook
- Class E AU3FN0036091; LT BBBsf; Revision Outlook
- Class F AU3FN0036109; LT BBB-sf; Revision Outlook
Five Star 2019-1 Trust
- Class C AU3FN0052288; LT Asf; Revision Outlook
- Class D AU3FN0052296; LT BBB+sf; Revision Outlook
- Class E AU3FN0052304; LT BBB-sf; Rating Watch On
- Class F AU3FN0052312; LT BB+sf; Rating Watch On
Sapphire XIV Series 2016-1 Trust
- Class E AU3FN0031233; LT Asf; Revision Outlook
- Class F AU3FN0031241; LT A-sf; Revision Outlook
KEY RATING DRIVERS
Coronavirus Stresses
The Rating Watch Negative reflects the high probability that the
five tranches will be downgraded as a result of the coronavirus
pandemic affecting transactions with insufficient credit
enhancement to compensate for additional projected losses on the
portfolios. The Negative Outlook on the ratings of the seven
tranches reflects the likely downgrade as a result of the
coronavirus pandemic affecting transactions with a
larger-than-average exposure to self-employed borrowers, who Fitch
expects to be the most vulnerable in the current crisis due to
income volatility and rapid job losses.
The Australian government implemented lockdown measures on March
19, 2020 while New Zealand took containment measures on March 25.
Fitch has made assumptions about the spread of coronavirus and the
economic impact of the related containment measures. As a base-case
scenario, Fitch assumes a global recession in 1H20 driven by sharp
economic contractions in major economies with a rapid spike in
unemployment, followed by a recovery that begins in 3Q20 as the
health crisis subsides. However, if a longer lockdown period is
required to contain the virus in 2H20 or the health crisis extends
to 2021 because of the re-emergence of infections, a prolonged
economic contraction will take place that will be accompanied by
continued job losses and depressed markets.
Commentary describing Fitch's credit views and analytical approach
as a consequence of coronavirus is available in these reports:
- Global Economic Outlook: Crisis Update Late April 2020,
published April 22, 2020
- Fitch Ratings Coronavirus Scenarios: Baseline and Downside
Cases — Update, published April 29, 2020
- Global SF Rating Assumptions Updated to Reflect Coronavirus
Risk, published April 3, 2020
Additionally, analytical notes relevant for Australian and New
Zealand RMBS transactions are discussed in the commentary Fitch
Ratings' Approach to Addressing Coronavirus-Related Risks for
Australian, NZ RMBS, published May 5, 2020.
Weaker Asset Performance Outlook
Fitch expects a general weakening in borrowers' ability to keep up
with mortgage payments, as large-scale job losses may take place in
the manufacturing, tourism, hospitality and tertiary sectors. Fitch
has focused on ratings in the 'Asf' category and below as Fitch
expects less sensitivity to macroeconomic changes in the
corresponding rating assumptions at high investment-grade ratings.
The RWN on the class E and F notes from Five Star 2019-1 Trust and
the class D, E and F notes from Sapphire XV Series 2016-2 Trust
reflects the heightened probability of downgrade with the changed
macroeconomic baseline assumptions.
Large Exposure to Self-Employed
Notes rated up to and including 'Asf' from transactions with
self-employed borrower concentrations above 50% and notes rated up
to and including 'BBBsf' of transactions with self-employed
borrower concentrations between 25% and 50% have had their rating
Outlooks revised to Negative from Stable. This is because Fitch
expects the performance of these transactions to weaken as income
support for self-employed borrowers offered by the Australian and
New Zealand governments may not be sufficient or the borrowers may
not be eligible for the measures. Some self-employed borrowers will
not be able to recover lost income, increasing the risk of mortgage
arrears and ultimately default.
The tranches affected are: the class E and F notes from Sapphire
XIV Series 2016-1 Trust, the class D, E and F notes from Sapphire
XVI Series 2017-1 Trust, and the class C and D notes from Five Star
2019-1 Trust.
At present, Fitch believes the performance of loans to
self-employed and other employment types will converge in higher
investment-grade rating scenarios.
Liquidity Risk
The option for borrowers to take up a payment holiday of up to six
months on their mortgage payments has been provided by lenders in
Australia and New Zealand. Fitch believes the take-up rate will be
moderate for conforming RMBS transactions but high for
non-conforming RMBS transactions or transactions with high
exposures to self-employed borrowers, resulting in a reduction of
available revenue to pay transaction senior costs and note
interest. Transactions may rely on other sources of funds, such as
the use of principal collections, liquidity facility or reserves,
to ensure timely payment of such items.
Fitch has tested the ability of all Fitch-rated Australian and New
Zealand transactions to meet senior costs and note interest
payments based on current interest rates. In the unlikely scenario
of no mortgage payments being collected, all transactions will be
able to cover these costs from the liquidity facilities or reserves
for at least the next five months. The transactions can also use
any principal payments received to pay interest if the take-up rate
for payment holidays is less than 100%.
RATING SENSITIVITIES
Developments that may, individually or collectively, lead to
positive rating action/upgrade or affirmations include:
- Credit enhancement ratios increase as the transactions
deleverage to fully compensate for the credit losses and cash-flow
stresses that are commensurate with higher rating scenarios, all
else being equal.
Developments that may, individually or collectively, lead to
negative rating action/downgrade include:
- Transaction liquidity positions weaken due to large take-ups on
mortgage payment moratoriums and new defaults as a consequence of
the coronavirus crisis.
- A longer-than-expected recessionary period that weakens
macroeconomic fundamentals beyond Fitch's current base case. Credit
enhancement ratios cannot fully compensate for the credit losses
and cash-flow stresses associated with the current rating
scenarios, all else being equal.
Fitch expects to resolve the RWN within the next six months, with
the likely rating impact ranging from affirmations to multi-notch
downgrades, depending on the trajectory of the coronavirus crisis
and the take-up rate on payment holidays.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Structured Finance
transactions have a best-case rating upgrade scenario (defined as
the 99th percentile of rating transitions, measured in a positive
direction) of seven notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of seven notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings
are based on historical performance.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset
pools and the transactions. There were no findings that were
material to this analysis.
Fitch sought to receive a third-party assessment conducted on the
initial asset portfolio information prior to these transactions'
closing, but none was made available to Fitch. Fitch has not
reviewed the results of any third-party assessment of the asset
portfolios as part of its ongoing monitoring.
As part of its ongoing monitoring, Fitch reviewed a small targeted
sample of Bluestone Group's and Victorian Mortgage Group's
origination files and found the information contained in the
reviewed files to be adequately consistent with the originators'
policies and practices and the other information provided to the
agency about the asset portfolios.
Overall, Fitch's assessment of the asset pool information relied
upon for the agency's rating analysis according to its applicable
rating methodologies indicates that it is adequately reliable.
SOURCES OF INFORMATION
The information was used in the analysis:
- Transaction reporting data provided by Bluestone Group and
Victorian Mortgage Group as of March 2020
- Loan enforcement details provided by Bluestone Group and
Victorian Mortgage Group as of March 2020
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria. In addition, the sources
described under Sources of Information, which are not discussed in
the criteria were used.
The issuers have informed Fitch that not all relevant underlying
information used in the analysis of the rated notes is public.
ESG CONSIDERATIONS
Sapphire XIV Series 2016-1, Sapphire XV Series 2016-2 and Sapphire
XVI Series 2017-1 have an ESG Relevance Score of 4 for Exposure to
Social Impact due to its consideration in the cash flow analysis of
the mortgage lender's limited ability to reprice loans as a result
of borrowers paying above-market rates, which has a negative impact
on the credit profile and is relevant to the ratings in conjunction
with other factors.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on the entity, either
due to their nature or the way in which they are being managed by
the entity.
FLIGHT CENTRE: Sells Melbourne Headquarters for AUD62 Million
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Joyce Abaño at Inside Retail reports that embattled travel agency
Flight Centre has sold its Victorian headquarters for AUD62.15
million to the Shakespeare Property Group.
Inside Retail relates that the cash-strapped retailer said the sale
of its St Kilda Road property in Melbourne will be completed in
July 2020.
According to Inside Retail, Paul Burns, Fitzroys director who
brokered the off-market transaction with Shakespeare Property
Group, the property arm of boutique investment manager Prime Value
Asset Management, said numerous parties made offers to buy the
asset.
"Ultimately, the deal was negotiated in an abbreviated timeframe
and subject to a very short due diligence," the property firm
stated, the report relays.
Flight Centre said it would lease back 75 per cent of the property
it had acquired for AUD32 million in 2008 as it has long-term
occupants, Inside Retail adds.
The 11-storey glass tower has a net lettable area of 7506sqm and is
on a 2,317sqm site opposite Fawkner Park.
Five tenants occupy the fully-leased building, including Flight
Centre and soccer's state governing body Football Victoria, the
report notes.
According to the report, Mr. Burns said while in some areas of the
market COVID-19 has brought a "wait and see" approach among buyers,
securely-leased investments remain highly sought after as cashed-up
investors are more motivated to set themselves in bricks and mortar
with income.
"Buyers taking a long-term view beyond the COVID-19 environment
recognise St Kilda Road's fundamentals have it well-placed to
maintain its strong performance of recent years," Inside Retail
quotes Mr. Burns as saying.
He said investors have been actively pursuing St Kilda Road
buildings with value-add and repositioning potential, looking to
take advantage of Melburnians' increasing preference to live, work
and play across the inner city, Inside Retail relays.
"My understanding is that SPG sees this as an opportunity to buy a
strategically located office property, in this case, located a
short distance from the future Anzac Metro station that will
further enhance accessibility to St Kilda Road."
Anzac station is part of the AUD11 billion Metro Tunnel project and
is due to open by 2025, complementing multiple tram routes at the
doorstep of 436 St Kilda Road and at Domain Interchange close by.
The building is also metres from Albert Park Lake and the Royal
Botanic Gardens, the report says.
Flight Centre Travel Group Ltd http://www.flightcentre.com/--
operates as a retail travel agency in Australia. The Company
operates close to 1,200 outlets throughout Australia and
internationally including New Zealand, Hong Kong, South Africa,
Canada and the United Kingdom. The Company's agencies and brands
include Flight Centre, Travel Associates and Student Flights.
GO TO COLLECTION: Christchurch Madam Woo to Shut Doors Permanently
------------------------------------------------------------------
Tina Law at Stuff.co.nz reports that Christchurch's Madam Woo
restaurant will close its doors permanently as it becomes the
latest casualty of the Covid-19 crisis.
Eight staff at the Malaysian restaurant, co-founded by celebrity
chef Josh Emett, will lose their jobs, Stuff discloses.
Stuff relates that Fleur Caulton, chief executive and co-founder of
Go To Collection, which owns nine Madam Woo, Hawker and Roll and
Rata Restaurants across New Zealand - said the Christchurch
business had been challenging prior to the coronavirus crisis.
"Covid put the nail in the head."
According to Stuff, Ms. Caulton said wording in the lease agreement
allowed the company to exit the lease at the St Asaph St building,
which was not always an easy thing to do.
"We have had a good look at the entire business. It's a very
difficult decision to make," the report quotes Ms. Caulton as
saying. "We're doing our best to make sure our business is viable
on the other side. It's a really hard time for everybody."
Stuff relates that Ms. Caulton said Hawker and Roll, on the corner
of Cashel Mall and Oxford Tce, was in a good position and would
definitely reopen.
The company was also pushing ahead with opening another Hawker and
Roll at Commercial Bay in central Auckland, the report says.
According to the report, the Christchurch Madam Woo restaurant was
at the centre of a hepatitis A scare in January when a chef
prepared food there over two days. Several diners had to be tracked
down and vaccinated.
One of the biggest challenges facing the hospitality sector was the
unknown, Ms. Caulton, as cited by Stuff, said.
"We just don't know how people are going to behave and what people
are going to do."
She said it was hard to know if moving to Alert Level 2 sooner
would have helped, but allowing regional travel again and opening
up trans-Tasman borders would make a real difference to
hospitality, Stuff adds.
The Government will decide today, May 11, when the country will
move into level 2, which will allow more businesses to reopen, but
under strict social distancing conditions, the report notes.
ILLWARRA HAWKS: Second Creditors' Meeting Set for May 18
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A second meeting of creditors in the proceedings of Illwarra Hawks
Pty Ltd has been set for May 18, 2020, at 12:00 p.m. via virtual
meeting.
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by May 15, 2020, at 4:00 p.m.
Michael Gregory Jones of Jones Partners was appointed as
administrator of Illwarra Hawks on April 2, 2020.
LA TROBE 2020-1: S&P Assigns Prelim. B Rating on Cl. F Trusts
-------------------------------------------------------------
S&P Global Ratings assigned its preliminary ratings to eight of the
10 classes of residential mortgage-backed securities (RMBS) to be
issued by Perpetual Corporate Trust Ltd. as trustee for La Trobe
Financial Capital Markets Trust 2020-1. La Trobe Financial Capital
Markets Trust 2020-1 is a securitization of nonconforming and prime
residential mortgages originated by La Trobe Financial Services Pty
Ltd.
The preliminary ratings reflect:
-- That the credit risk of the underlying collateral portfolio and
the credit support provided to each class of notes are commensurate
with the ratings assigned. Credit support is provided by
subordination and excess spread. The assessment of credit risk
takes into account La Trobe Financial's underwriting standards and
approval process, and La Trobe Financial's servicing quality.
-- That the transaction's cash flows can meet timely payment of
interest and ultimate payment of principal to the noteholders under
the rating stresses. Key factors are the level of subordination
provided, the condition that a minimum margin will be maintained on
the assets, an amortizing liquidity facility sized at 1.5% of the
note balance, the principal draw function, the yield reserve, the
retention amount built from excess spread before the call date, the
amortization amount built from excess spread after the call date or
upon a servicer default, and the provision of an extraordinary
expense reserve. All rating stresses are made on the basis that the
trust does not call the notes at or beyond the call date, and that
all rated notes must be fully redeemed via the principal waterfall
mechanism under the transaction documents.
-- That S&P also have factored into its ratings the legal
structure of the trust, which has been established as a
special-purpose entity and meets our criteria for insolvency
remoteness.
-- The counterparty support provided by National Australia Bank
Ltd. as liquidity facility provider and Commonwealth Bank of
Australia as bank account provider. The transaction documents for
the liquidity facility and bank accounts include downgrade language
consistent with S&P's "Counterparty Risk Framework: Methodology And
Assumptions" criteria, published on March 8, 2019, that requires
the replacement of the counterparty or other remedy, should its
rating fall below the applicable rating.
-- That loss of income for borrowers in the coming months due to
the effects of COVID-19 will likely put liquidity strain on the
transaction and raises the probability of upward pressure on
mortgage arrears over the longer term. S&P has therefore applied a
range of additional stresses in our analysis to assess the rated
notes' sensitivity to liquidity stress, and the possibility of
higher arrears. As of April 30, 2020, borrowers with
COVID-19-related hardship arrangements make up 12.3% of the closing
pool balance.
S&P Global Ratings acknowledges a high degree of uncertainty about
the rate of spread and peak of the coronavirus outbreak. Some
government authorities estimate the pandemic will peak about
midyear, and we are using this assumption in assessing the economic
and credit implications. S&P believes the measures adopted to
contain COVID-19 have pushed the global economy into recession. As
the situation evolves, S&P will update its assumptions and
estimates accordingly.
PRELIMINARY RATINGS ASSIGNED
La Trobe Financial Capital Markets Trust 2020-1
Class Rating Amount (mil. A$)
A1S AAA (sf) 281.25
A1L AAA (sf) 593.75
A2 AAA (sf) 235.00
B AA (sf) 37.50
C A (sf) 36.25
D BBB (sf) 25.00
E BB (sf) 12.50
F B (sf) 12.50
Equity 1 NR 8.125
Equity 2 NR 8.125
NR--Not rated.
LIBERTY FUNDING 2020-1: Moody's Rates Class F Notes '(P)B1'
-----------------------------------------------------------
Moody's Investors Service has assigned the following provisional
ratings to the notes to be issued by Liberty Funding Pty Ltd in
respect of Liberty Series 2020-1.
Issuer: Liberty Funding Pty Ltd in respect of Liberty Series
2020-1
JPY 26,300.0 million Class A1 Notes, Assigned (P)Aaa (sf)
AUD 64.5 million Class A2 Notes, Assigned (P)Aaa (sf)
AUD 22.0 million Class B Notes, Assigned (P)Aa2 (sf)
AUD 10.5 million Class C Notes, Assigned (P)A2 (sf)
AUD 8.0 million Class D Notes, Assigned (P)Baa2 (sf)
AUD 9.0 million Class E Notes, Assigned (P)Ba1 (sf)
AUD 2.0 million Class F Notes, Assigned (P)B1 (sf)
The AUD9.0 million Class G Notes are not rated by Moody's.
The transaction is a securitisation of a portfolio of Australian
residential mortgages. All mortgages were originated and are
serviced by Liberty Financial Pty Ltd (Liberty, unrated).
Liberty is an Australian non-bank lender. It started originating
non-conforming residential mortgages in 1997. It subsequently
expanded into prime residential mortgage origination, as well as,
among others, auto loans, small commercial mortgage loans and
personal loans.
Residential mortgages remain Liberty's predominant business. As of
December 2019, it had a portfolio of Australian mortgage assets
over AUD8.2 billion, of which 75% was securitised in public
transactions.
RATINGS RATIONALE
The provisional rating takes into account, among other factors,
evaluation of the underlying receivables, the evaluation of the
capital structure and credit enhancement provided to the notes, the
availability of excess spread over the life of the transaction, the
liquidity reserve in the amount of 2.00% of the notes balance, the
legal structure, and the credit strength and experience of Liberty
as Servicer.
Moody's MILAN credit enhancement for the collateral pool is 7.50%,
while the expected loss is 1.50%. MILAN CE represents the loss it
expects the portfolio to suffer in a severe recessionary scenario,
and does not take into account structural features of the
transaction. or lenders mortgage insurance benefit. The expected
loss represents a stressed, through-the-cycle loss relative to
Australian historical data.
After lenders mortgage insurance benefit, MILAN CE is 7.29%.
The key transactional features are as follows:
- Class A1 Notes benefit from 25.0% credit enhancement.
- The notes will be repaid on pro-rata amortization, where
principal is allocated across all notes, other than Class G Notes,
from closing date, unless there is an event of default. Upon
satisfaction of all stepdown conditions which include - the payment
date falling prior to payment date in May 2024, absence of charge
offs on any notes and average arrears greater than or equal to 30
days (as calculated over the prior 3 periods plus the current
period) do not exceed 4% - Class A1, Class A2, Class B, Class C,
Class D, Class E, and Class F Notes will receive a pro-rata share
of principal payments (subject to additional conditions). The Class
G Notes do not step down and will only receive principal payments
once all other notes have been repaid. The principal pay-down
switches to sequential pay across all notes, once the aggregate
loan amount falls below 20.0% of the aggregate loan amount at
closing, or on or following the payment date in May 2024.
- The liquidity reserve with a required limit equal to 2.0% of
the aggregate invested amount of the notes less the redemption fund
balance. The reserve is subject to a floor of AUD600,000.
- The guarantee fee reserve account, which is unfunded at closing
and will build up to a limit of 0.30% of the issued notional from
proceeds paid to Liberty Credit Enhancement Company Pty Ltd as
Guarantor, from the bottom of the interest waterfall prior to
interest paid to the Class G noteholders. The reserve account will
firstly be available to meet losses on the loans and charge-offs
against the notes. Secondly, it can be used to cover any liquidity
shortfalls that remain uncovered after drawing on the liquidity
facility and principal. Any reserve account balance used can be
reimbursed to its limit from future excess income.
The key pool features are as follows:
- The portfolio has a scheduled loan to value ratio of 66.0%,
with proportion of loans with scheduled LTV above 80.0% (10.9%) and
above 90% (5.1%).
- The portfolio has a low weighted average seasoning of 7.4
months, with 60.6% of the portfolio originated in the past six
months.
- 6.7% of the loans in the portfolio were extended on an
alternative documentation ('alt doc) basis.
- The portfolio contains 3.7% exposure to borrowers with prior
credit impairment (default, judgment or bankruptcy). Moody's
assesses these borrowers as having a significantly higher default
probability.
- Investment and IO loans represent 22.5% and 6.3% of the pool,
respectively.
Its analysis has considered the effect of the coronavirus outbreak
on the Australia economy as well as the effects that the announced
government measures, put in place to contain the virus, will have
on the performance of consumer assets.
The contraction in economic activity in the second quarter will be
severe and the overall recovery in the second half of the year will
be gradual. However, there are significant downside risks to its
forecasts in the event that the pandemic is not contained and
lockdowns have to be reinstated. As a result, the degree of
uncertainty around its forecasts is unusually high. Moody's regards
the coronavirus outbreak as a social risk under its ESG framework,
given the substantial implications for public health and safety.
Methodology Underlying the Rating Action:
The principal methodology used in these ratings was Moody's
Approach to Rating RMBS Using the MILAN Framework published in July
2019.
Factors that would lead to an upgrade or downgrade of the ratings:
Levels of credit protection that are greater than necessary to
protect investors against current expectations of loss could lead
to an upgrade of the ratings. Moody's current expectations of loss
could be better than its original expectations because of fewer
defaults by underlying obligors or higher recoveries on defaulted
loans. The Australian job market and the housing market are primary
drivers of performance.
A factor that could lead to a downgrade of the notes is
worse-than-expected collateral performance. Other reasons for
performance worse than Moody's expects include poor servicing,
error on the part of transaction parties, a deterioration in credit
quality of transaction counterparties, fraud and lack of
transactional governance.
LNG INTERNATIONAL: First Creditors' Meeting Set for May 18
----------------------------------------------------------
A first meeting of the creditors in the proceedings of:
- LNG International Pty Ltd;
- LNG Technology Pty Ltd;
- Mayflower LNG Pty Ltd; and
- North American LNG Pty Ltd
will be held on May 18, 2020, at 2:00 p.m. at the offices of
PricewaterhouseCoopers, Level 19, at 2 Riverside Quay, in
Southbank, Victoria.
Craig Crosbie, Simon Theobald & Daniel Walley of
PricewaterhouseCoopers were appointed as administrators of LNG
International on May 6, 2020.
MICHAEL SKLOVSKY: Second Creditors' Meeting Set for May 15
----------------------------------------------------------
A second meeting of creditors in the proceedings of Michael
Sklovsky Pty Ltd has been set for May 15, 2020, at 2:00 p.m. via
online video conference using Zoom Meetings
The purpose of the meeting is (1) to receive the report by the
Administrator about the business, property, affairs and financial
circumstances of the Company; and (2) for the creditors of the
Company to resolve whether the Company will execute a deed of
company arrangement, the administration should end, or the Company
be wound up.
Creditors wishing to attend are advised proofs and proxies should
be submitted to the Administrator by May 13, 2020, at 5:00 p.m.
Rachel Elizabeth Burdett and Barry Wight of Cor Cordis were
appointed as administrators of Michael Sklovsky on Feb. 20, 2020.
SECURE INVESTMENTS: ASIC Obtains Asset Freezing Orders
------------------------------------------------------
The Australian Securities and Investments Commission (ASIC) has
commenced civil proceedings and obtained urgent interim orders in
the Federal Court against Mudasir Mohammed Naseeruddin (commonly
referred to as Naseer or Mudasir), Secure Investments Pty Ltd and
Aquila Group Pty Ltd (the Defendants) due to concerns of misleading
and deceptive conduct and the operation of an illegal managed
investment scheme.
This matter demonstrates ASIC's readiness to take urgent action to
protect vulnerable superannuation consumers in the current COVID-19
environment.
On May 1, 2020, ASIC obtained urgent interim orders to:
* appoint Provisional Liquidators to Secure Investments;
* appoint Receivers and Managers to Aquila;
* stop Aquila and Mr. Naseeruddin from dealing with, disposing
of and/or diminishing the value of their assets;
* restrain the Defendants from carrying on any kind of
financial services business in Australia;
* restrain the Defendants from receiving, soliciting,
transferring or disposing of investor funds they have already
received for previous investment activities;
* restrain the Defendants from raising further funds from
investors for investment activities; and
* restrain Mr. Naseeruddin from leaving Australia.
ASIC alleges Mr. Naseeruddin raised at least AUD2.4 million from 28
investors through his company Secure Investments. It is ASIC's case
that investors were encouraged to roll over their superannuation
funds into new self-managed superannuation funds (SMSFs) and invest
their SMSF monies in Secure Investments by way of a loan and were
told they were investing in property.
ASIC also alleges that from December 2019, Mr. Naseeruddin raised
AUD250,000, through his company Aquila, by encouraging Indigenous
investors to roll over their superannuation funds into new SMSFs
and then invest the SMSF monies in Aquila by way of a loan. ASIC
alleges that Mr. Naseeruddin paid these investors a lump sum from
their SMSF in exchange for an agreement to invest in Aquila and
they were told their SMSFs were investing in property.
ASIC also alleges the Defendants used investor funds, at least in
part, for their own personal use.
ASIC is seeking declarations from the Federal Court that the
Defendants have contravened the Corporations Act 2001 by making
false and misleading statements and engaging in misleading and
deceptive conduct. ASIC is also seeking declarations that Mr
Naseeruddin and Secure Investments breached the Corporations Act by
operating an unregistered managed investment scheme which should
have been registered. Also, that Mr. Naseeruddin and Secure
Investments operated the unregistered scheme without holding an
Australian Financial Services licence.
ASIC's investigation is continuing.
The hearing of ASIC's interlocutory application has been adjourned
to 9:30 a.m. on June 19, 2020.
=========
C H I N A
=========
DAFA PROPERTIES: S&P Alters Outlook to Negative & Affirms 'B' ICR
-----------------------------------------------------------------
S&P Global Ratings revised its outlook on DaFa Properties Group
Ltd. to negative from stable. At the same time, S&P affirmed its
'B' long-term issuer credit rating on Dafa and its 'B-' long-term
issue rating on the company's outstanding senior unsecured notes.
S&P said, "We revised the outlook because we expect Dafa's
consolidated revenue growth to remain slow over the next 12 months,
partly due to its much higher utilization of the JV model, and
because of its weakened profitability. As a result, the company's
heightened leverage may not improve substantially over the next one
to two years. Dafa's consolidated debt-to-EBITDA ratio of 7.7x in
2019 was higher than our expectation of 5.0x-5.5x. Although
contracted sales growth was strong at 68% during the year, revenue
growth was only 25%."
The company's contracted sales from JVs increased to 48% in 2019,
from 5% in 2018, with attributable sales falling below expectation
as well. In addition, revenue recognition has been delayed for one
of the projects, and margins fell because of lower average selling
prices (ASP) and rising land costs.
S&P said, "We expect Dafa's revenue to grow by over 20% to Chinese
renminbi (RMB) 9.7 billion in 2020 on a proportionately
consolidated basis. Despite that, proportionate revenue growth will
still have the risk of running considerably below total contracted
sales if the attributable ratio drops. In addition, with more JV
projects, the company will need to rely more on its partners for
not only sales execution but project completion, which may result
in slippages against our current expectation. Nevertheless, growth
will still be supported by total sold but unrecognized revenue of
RMB15 billion as at the end of 2019. Consolidated revenue, however,
will only grow 7%-12% over 2020, due to faster revenue growth from
JV projects than the company's own projects on a consolidated
basis.
"We believe Dafa's total contracted sales target of around RMB24
billion (15% growth) for 2020 is still achievable amid the impact
from COVID-19, despite the year-on-year decrease of 13% in
contracted sales to RMB3 billion in the first quarter of 2020. That
is supported by total saleable resources of RMB43 billion in 2020.
This will translate into a sell-through rate of 56%, which is lower
than the historical level of about 70%, due to impact from the
pandemic. With slower sales growth, we also expect the increase in
the company's debt to moderate at 12%-15% during the year."
Dafa's profitability will likely stay low in 2020-2021 after the
unexpected deterioration in 2019. S&P's expectation of a
persistently low margin mainly reflects the price caps imposed by
local governments, a higher proportion of land coming from public
auctions (typically higher land cost), and increasing revenue
contribution from cities with lower ASP. In 2019, ASP dropped about
15%.
Moreover, the contribution of major high-margin projects has come
to an end. In the past, the company benefited from a project in
Wenzhou, Zhejiang province, which had a gross margin of 36%, and
contributed to one-third of Dafa's 2018 revenue, leading to the
temporarily high margin. S&P said, "That said, although the
company's margin will remain at a lower level, the risk of further
deterioration is also limited, in our view. We believe most of the
negative factors have played out, and also consider the
government's policy stance of stabilizing the property market."
S&P said, "We expect Dafa's consolidated leverage to remain high at
7.5x-8x in 2020 as the company will continue to rely on JV projects
to pursue growth. However, its consolidated leverage will improve
to 7.0x-7.5x in 2021, as dividend contribution from JVs will become
material. Dafa's see-through leverage will be stable at about 7x in
2020 and improve to 6.0x-6.5x in 2021. That is because we expect
greater revenue recognition of contracted sales of JV projects,
underpinned by growth of about 120% in proportionate JV revenue."
However, a fair degree of risk remains given the company's short
track record of handling the complexity of the JV model.
Nevertheless, Dafa's capital structure is improving. The company's
reliance on alternative financing significantly reduced in 2019:
nonbank borrowings, such as trust financing and entrusted loans
only accounted for 21% of its total reported debt, compared with
55% in 2018. S&P said, "In our view, this is partly on account of
first-time offshore issuances in 2019, after Dafa went public in
2018. Dafa's current capital structure compares well with some of
its larger, or similar rated peers, even though it is one of the
smallest developers among those we rate in China."
In addition, Dafa's rapid expansion will moderately improve its
business scale and geographical diversity. S&P forecasts the
company will maintain the ratio of land acquisition to proceeds
from contracted sales at 50%-55% over the next one to two years. As
of end-2019, the company's total land reserve increased to 5
million square meters (sq.m.) across 29 cities, with a total of 69
projects. Dafa added 2.7 million sq.m. of new parcels to its land
bank in 2019, providing support to sustain its growth. Going
forward, Dafa will still focus on obtaining land in the Yangtze
River Delta, with potential to moderately improve its geographical
diversity by entering into the Greater Bay Area or the
Sichuan-Chongqing area through partnering with local peers.
The negative outlook on Dafa reflects S&P's view that the company's
leverage may not improve significantly over the next 12 months
after deteriorating in 2019. Dafa's revenue recognition should
increase more substantially as its project delivery should pick up
and its margins will stabilize. However, a larger amount of
off-balance-sheet projects could dampen revenue recognition due to
more prevalent unconsolidated JV projects.
S&P could lower the rating if:
-- Dafa's debt-funded acquisitions are more aggressive than S&P
expects or key project launches and completions are delayed, such
that its consolidated debt-to-EBITDA ratio is above 7.5x, or its
see-through debt-to-EBITDA ratio is above 7.0x in 2020;
-- Over a longer horizon, the company's leverage improvement is
below its expectation due to more aggressive debt-funded growth,
such that its consolidated debt-to-EBITDA ratio is above 7.0x, or
its see-through debt-to-EBITDA ratio is above 6.5x from 2021;
-- Its debt-servicing ability deteriorates due to an inability to
lower its funding costs, such that its EBITDA interest coverage
falls below 1.5x; or
-- Dafa's liquidity weakens, including a lack of viable plans to
refinance its offshore bonds, such that its projected liquidity
sources over liquidity uses is below 1.0x.
S&P may revise the outlook to stable if Dafa controls its debt
level while achieving solid revenue growth. An upside trigger could
be the company's consolidated debt-to-EBITDA and its see-through
debt-to-EBITDA ratios improving to below 7.0x and 6.5x,
respectively, on a sustained basis while EBITDA interest coverage
remains above 1.5x.
YIHUA ENTERPRISE: Moody's Cuts CFR to Ca, Will Withdraw Ratings
---------------------------------------------------------------
Moody's Investors Service has downgraded Yihua Enterprise Co.,
Ltd.'s corporate family rating to Ca from Caa1.
At the same time, Moody's has downgraded to Ca from Caa2 the rating
on the USD250 million senior unsecured notes due October 2020
issued by Yihua Overseas Investment Ltd and guaranteed by Yihua
Group.
The outlook on the ratings remains negative.
Subsequently, Moody's will withdraw all of Yihua Group's ratings
due to insufficient information.
RATINGS RATIONALE
The rating downgrade follows Yihua Group's announced inability to
pay in full the RMB65 million coupon payable on May 6, 2020[1] of
the company's RMB1 billion onshore medium-term notes issued in
2017, with the principal due in 2022. This event reflects Yihua
Group's very tight liquidity and could trigger an acceleration of
its various payment obligations.
The Ca ratings and negative outlook reflect Moody's expectation of
high economic loss for bondholders when compared to the original
promises on payment.
Moody's has decided to withdraw the ratings because it believes it
has insufficient or otherwise inadequate information to support the
maintenance of the ratings.
The principal methodology used in these ratings was Business and
Consumer Service Industry published in October 2016.
Yihua Enterprise (Group) Co., Ltd. is based in Shantou, China, and
operates in segments including furniture manufacturing, healthcare,
property development, and financial investment.
=========
I N D I A
=========
ASIAN LAKTO: ICRA Withdraws 'B+' Rating on INR13cr LT Loan
----------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of Asian
Lakto Industries Limited (ALIL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term– 13.00 [ICRA]B+(Stable); ISSUER NOT
Fund based COOPERATING; Rating Withdrawn
Limits
Rationale
The ratings assigned to ALIL have been withdrawn at the request of
the client, based on the no-objection certificate provided by its
bankers.
Incorporated in 1994 by Mr. Radhe Shyam Poddar, Mr. Gopal Poddar
and Mr. Neeraj Poddar, ALIL was originally engaged in the
processing of flavoured milk. In 2007, the company diversified its
business and started processing fruit juices. In 2010, ALIL exited
the flavoured milk business owing to continued losses. ALIL has an
established distribution network across the states of Haryana,
Punjab and Himachal Pradesh and sells its fruit juices through
various distributors and retail chains under the brand name, 'Mr.
Fresh', in various flavors of mango, apple, lichi, guava, mixed
fruit, etc.
ASIANLAK HEALTH: ICRA Withdraws 'B+' Ratings on INR10cr Loans
-------------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of
Asianlak Health Foods Ltd. (AHFL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based– 3.00 [ICRA]B+(Stable) ISSUER NOT
Term Loans COOPERATING; Rating Withdrawn
Fund based– 7.00 [ICRA]B+(Stable) ISSUER NOT
Cash Credit COOPERATING; Rating Withdrawn
Rationale
The ratings assigned to AHFL have been withdrawn at the request of
the client, based on the no-objection certificate provided by its
bankers.
Incorporated in 1995, AHFL manufactures packaged drinking water and
soda for Bisleri International Private Limited as a franchise
partner in Punjab and Haryana. The company is also a franchise
partner for BIPL's soft drinks in Jammu and Kashmir, and Himachal
Pradesh, apart from Punjab and Haryana. The company's plant is in
Ludhiana (Punjab) and has an installed processing capacity of
7,20,000 liters of drinking water per day.
AZAM RUBBER: ICRA Removes 'D' Rating From Not Cooperating
---------------------------------------------------------
ICRA has removed its earlier rating of [ICRA]D from the 'ISSUER NOT
COOPERATING' category as Azam Rubber Products Limited has now
submitted its 'No Default Statement' ("NDS"). The company's rating
was moved to the 'ISSUER NOT COOPERATING' category in September
2019.
BANASHANKARI AGRO: ICRA Moves B+ Rating to Not Cooperating
----------------------------------------------------------
ICRA has moved the long term ratings for the bank facilities of
Banashankari Agro Farm LLP (BAFLLP) to the 'Issuer Not Cooperating'
category. The rating is now denoted as "[ICRA]B+ (Stable) ISSUER
NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based- 15.00 [ICRA]B+ (Stable) ISSUER NOT
Cash Credit COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Fund based- 3.00 [ICRA]B+ (Stable) ISSUER NOT
Term Loan COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Unallocated 1.20 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best
available/dated/limited information on the issuers' performance.
Accordingly, the lenders, investors and other market participants
are advised to exercise appropriate caution while using this rating
as the rating may not adequately reflect the credit risk profile of
the entity.
Banashankari Agro Farms LLP is a partnership firm, owned and
managed by Mr. S N Raghunath and family. The firm is based out of
Malur in Karnataka, and commenced operations from April 2016.
BAFLLP was procuring hatchable eggs primarily from its group
concern, Banshankari Poultry Farms Private Limited (BPFPL), and
supplies day-old chick (DOCs) received from its hatchery unit to
contract farmers for rearing, and then sells the live birds to
local distributors. In December 2018, the firm has taken over the
entire process of BPFPL and is now engaged in the process from
breeding of parent broiler to selling the live birds to local
distributors. The firm has an installed aggregate placement
capacity to sell 250000 birds per week and it is operating with a
capacity to sell 180,000 birds per week at present.
BHALARA COTTON: ICRA Withdraws 'D' Rating on INR22cr Loan
---------------------------------------------------------
ICRA has withdrawn the ratings on certain bank facilities of
Bhalara Cotton Private Limited (BCPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based- 22.00 [ICRA]D ISSUER NOT COOPERATING;
Cash Credit Withdrawn
Rationale
The long-term assigned to Bhalara Cotton Private Limited (BCPL)
have been withdrawn based on the No-Due certificate provided by its
banker. ICRA is withdrawing the rating and that it does not have
information to suggest that the credit risk has changed since the
time the rating was last reviewed.
Incorporated in 2005, Bhalara Cotton Private Limited is promoted by
Mr. Bipin Ranpariya and Mr. Jitendra Bhalara along with other
shareholders. The company is engaged in the business of ginning and
pressing of raw cotton with installed manufacturing capacity of
around 250 bales per day. The company is equipped with 24 ginning
machines and 1 pressing machine having capacity to produce 250
bales per day.
COASTAL ENERGEN: ICRA Reaffirms 'D' Rating on INR6,113.79cr Loan
----------------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of Coastal
Energen Private Limited (CEPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 6,113.79 [ICRA]D; Reaffirmed
Cash Credit 1,150.00 [ICRA]D; Reaffirmed
Short-term
Non-fund Based 40.00 [ICRA]D; Reaffirmed
Long-term
Non-fund
Based 465.20 [ICRA]D; Reaffirmed
Unallocated
Limit 25.21 [ICRA]D; Reaffirmed
Rationale
The rating reaffirmation factors in the continuous delays in
meeting the debt obligations by CEPL primarily due to its stretched
liquidity position, arising from delayed payments from the Tamil
Nadu Generation and Distribution Corporation Limited (TANGEDCO),
its key counterparty for power sales. In addition, while one of
CEPL's 600-MW imported-coal based thermal power generation unit has
a 15-year power purchase agreement (PPA) with TANGEDCO, the other
unit of equivalent capacity is yet to enter into a long-term PPA
with a buyer. Therefore the plant load factor (PLF) for the
company's 1200-MW thermal power capacity remained low at 34% in
FY2020. ICRA, however, notes the project's high plant availability
factor, which enables CEPL to bill and recover capacity charges
from TANGEDCO, as per the terms of the long-term PPA. Although it
has been able to pass on the exchange rate fluctuations in energy
charges to TANGEDCO as per the PPA terms, the energy charges are
non-escalable and may not fully reflect the prevailing coal prices.
CEPL's profitability, thus, remains exposed to fluctuations in
international coal prices.
Key rating drivers and their description
Credit strengths
* Limited offtake risk for unit-1: The presence of a long-term PPA
with TANGEDCO for the entire capacity of 600 MW results in limited
off-take risk for unit-1.
Credit challenges
* Delay in debt servicing: The company faces high offtake risk for
its unit-2 in the absence of any firm long-term PPA. Delays in the
signing of the PPA for 600 MW of unit-2, along with delays in the
payments from TANGEDCO for unit-1 has resulted in CEPL delaying its
debt servicing obligations.
* High counterparty credit risk: The company faced significant
delays in receivables from TANGEDCO for 600-MW power of unit-1,
which resulted in high counterparty credit risk.
* Margins exposed to fluctuations international coal prices:
Although the company has a pass through for exchange rate
fluctuations in energy charges as per the PPA terms, its
profitability would remain exposed to variations in international
coal prices, given the non-escalable nature of energy charges under
the PPA with TANGEDCO.
Liquidity position: Poor
The company's liquidity position remains poor as highlighted by its
inadequate cash accruals due to limited offtake arrangements, along
with significant delays in the receivables for the capacity tied up
with TANGEDCO.
Rating sensitivities
Positive triggers – The rating may be upgraded if the company
repays the debt obligations in a timely manner on a sustained
basis.
CEPL is a special purpose vehicle (SPV) promoted by Mr. Ahmed
Buhari (promoter of the Coal & Oil Group) for the development of a
1200-MW imported coal-based thermal power plant at Tuticorin in
Tamil Nadu. The Coal & Oil Group is a Dubai-based energy
conglomerate that operates as an integrated fuel solution provider
with interests in coal trading, technical consultancy for fuel
sourcing, handling, shipping, logistics etc. The flagship company
of the Group is Coal & Oil Company DMCC (C&O). The total project
cost for CEPL of INR7,870 crore was funded through a debt to equity
ratio of 80:20. Its unit-1 contributing to 600-MW power commenced
operations from December 2014 and unit-2 from January 2016.
In FY2019, the company reported a net loss of INR988.6 crore on an
operating income (OI) of INR1,523.5 crore compared to a net loss of
INR655.2 crore on an OI of INR1,815.9 crore in the previous year.
DEV COTTON: ICRA Keeps B on INR10.46cr Bank Loans in NonCooperating
-------------------------------------------------------------------
ICRA said the rating for the bank facilities for INR10.46 crore of
Dev Cotton & Oil Industries continues to remain under 'Issuer Not
Cooperating' category. The rating is denoted as "[ICRA]B (Stable);
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based– 1.21 [ICRA]B (Stable); ISSUER NOT
Term Loans COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
Fund-based– 9.25 [ICRA]B (Stable); ISSUER NOT
Cash Credit COOPERATING; Rating continues
to remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Dev Cotton & Oil Industries (DCOI) was established in February 2011
as partnership firm by Mr. Hareshbhai Ghodasara, Mr. Harshadbhai
Ghodasara and Mr. Jaywantbhai Baraiya. During current fiscal i.e.
FY 2015-16, the firm underwent change in management with Mr.
Harshadbhai Ghodasara voluntarily retiring from the firm and five
new partners were admitted. The firm is engaged in ginning and
pressing of raw cotton and crushing of cottonseeds with a fleet of
30 jumbo ginning machines, one pressing machine (automatic) and 8
expellers having an installed capacity to produce 325 cotton bales,
5MT cottonseed oil and 55MT of cottonseed oil cake per day, the
plant being operational for 24 hours.
FAROOQ CONSTRUCTIONS: ICRA Moves D Debt Rating to Not Cooperating
-----------------------------------------------------------------
ICRA has moved the long term ratings for the bank facilities of
Farooq Constructions (FC) to the 'Issuer Not Cooperating' category.
The rating is denoted as "[ICRA]D; ISSUER NOT COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 12.00 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based Moved to the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best
available/dated/limited information on the issuers' performance.
Accordingly, the lenders, investors and other market participants
are advised to exercise appropriate caution while using this rating
as the rating may not adequately reflect the credit risk profile of
the entity.
Farooq Constructions was established by Mr. Baiju Farooq in the
year 2000 as a proprietorship concern. In 2009, the entity was
converted into a partnership firm with Mr. Baiju Farooq and his
wife Ms. Sajeela Baiju as equal partners. The firm is a civil works
contractor located in Alappuzha, Kerala. The firm undertakes
projects for Public Works Department (PWD, Kerala), especially
construction of roads and other related civil works.
FUTURE CORPORATE: ICRA Lowers Rating on INR226.67cr Loan to D
-------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Future
Corporate Resources Private Limited (FCRPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term
Loans 226.67 [ICRA]D; revised from [ICRA]C
Long-term, 50.00 [ICRA]D; revised from [ICRA]C
Fund-based
Facilities
Short-term, 130.00 [ICRA]D; revised from [ICRA]A4
Non-fund
Based
Facilities
Principal 437.11 PP-MLD[ICRA]D; revised from
Protected PPMLD[ICRA]C
Market Linked
Debenture
Programme
(PP-MLD)
Material Event
On May 4, 2020, ICRA received a communication from FCRPL regarding
default in the payment of coupon (due on April 30, 2020) on the
PP-MLD programme rated by ICRA. The company has informed that it
has sought a moratorium in payments for the same from the
investors; however, the same has not been approved yet.
Impact of Material Event and Rationale
As per ICRA's default recognition policy pertaining to market
instruments, only if all investors approve the restructuring of
payment terms of the instrument before the due date of debt
servicing, does ICRA not consider such missed payments as default.
The rating revision to [ICRA]D reflects the default by FCRPL on the
payment of coupon on the PP-MLD programme rated by ICRA. The other
rated facilities have also been downgraded to [ICRA]D as per ICRA's
default recognition policy.
Credit challenges
* Weakened performance of operating businesses since FY2018: The
performance of the company's operating businesses has weakened
since FY2018, following the loss of business from the Group
companies due to concerted efforts at reducing intra-Group
transactions. This has impacted its media and fabric trading
segments. Furthermore, the company's mobile connection business,
T24, witnessed a significant decline in revenues to INR6.9 crore in
FY2019 from INR30.7 crore in FY2018 due to increased competitive
intensity post the launch of Reliance Jio. These resulted in an
operating loss of INR18.8 crore in FY2019. Coupled with high
interest expenses, this led to a cash loss of INR744.9 crore in
FY2019. Due to insufficient cash flows from its operations, FCRPL's
debt servicing is solely dependent on its ability to monetise its
investments and/or timely refinance its debt.
* Weak financial profile with high borrowing levels; leveraged
balance sheet to support investments/increase stakes in Group
ventures: The company's financial profile is weak, with high
borrowing levels mainly to support investments or increase stakes
in Group ventures, fund its losses and repay customer advances.
Despite a reduction in its total debt as on December 31, 2019
through monetisation of some of its investments, FCRPL's debt
levels are expected to remain high in the near to medium term.
* High overall Group debt level; increase in pledge levels in
various listed companies: Despite monetisation of investments
across various Group entities, the total Group debt has increased
as on December 31, 2019, as against March 31, 2019. ICRA notes the
increase in debt is mainly on account of an increase in debt of the
opcos, with the total debt at the Group's listcos increased to
INR12,778 crore as on September 30, 2019 from INR10,951 crore as on
March 31, 2019. With continued reduction in the share price of the
Future Group listcos, the total Group debt/market capitalisation
has increased to 1.2 times as on
March 16, 2020 from 0.4 times as on March 31, 2019. Furthermore,
this has resulted in an increase in the pledged shareholding of the
promoter Group, resulting in reduced financial flexibility.
However, the Group also has investments in several unlisted
entities, which provides an opportunity to monetize investments.
Liquidity position: Poor
The company's liquidity profile is poor on account of its weak
operating performance. It has sizeable debt repayment obligations
of ~Rs. 316.0 crore and ~Rs. 729.0 crore in FY2021 and FY2022,
respectively. Being the key investment vehicle for the Group,
FCRPL's prospects are tied to the fortunes of the underlying
investee companies. In absence of sufficient cash flows from
operations, its ability to timely monetise its investments and / or
timely refinance its debt is critical for meeting its debt
repayment obligations. ICRA takes comfort from the financial
support enjoyed by the company in the form of loans and advances
received from the Group companies.
Rating sensitivities
Positive triggers – The rating may be revised if there is a
material reduction in the Group debt both at the holdco as well as
the opco level, along with reduction in the pledge levels across
various listcos of the Future Group, resulting in regularisation of
debt servicing.
Consolidation/Standalone
The ratings are based on the standalone financial profile of the
company 1After selling partial stakes in the general and life
insurance businesses, Future Lifestyle Fashions Limited (FLFL) and
entire stake in Skechers in FY2019, the Future Group witnessed
investments from Blackstone (total investment of INR1,750 crore –
INR545 crore towards secondary purchase of 6% stake in FLFL and
INR1,200 crore as zero coupon NCD in holdco of FLFL), Nippon
Express (invested US$ 50 million as primary equity and US$ 50
million as secondary purchase in Future Supply Chain Solutions
Limited), AION (invested INR300 crore in FLFL) and Amazon (invested
US$ 200 million for 49% stake in Future Coupons Private Limited)
during the current year.
FCRPL's management has indicated further monetisation of
investments in the near term to reduce the Group's overall debt.
Total debt as on December 31, 2019 (excluding impact of Ind-As) for
the holdcos and total debt as on September 30, 2019 for the
listcos
Future Corporate Resources Private Limited (erstwhile Suhani
Trading and Investment Consultants Private Limited (STIC)), a
Future Group company, came into existence in its current form with
effect from March 31, 2017, after its amalgamation with the six
companies—Future Corporate Resources Limited (FCRL), PIL
Industries Limited, Weavette Business Ventures Limited, Manz Retail
Private Limited, ESES Commercials Private Limited, and Gargi
Business Ventures Private Limited. The company's name was changed
to FCRPL with effect from December 11, 2018. It is primarily an
investment company / holding company of the Future Group,
facilitating the funding of Group companies through various
investments and lending of loans and advances, and providing
services to scale up / support the retail business of the Group.
The company, moreover, acts as a media services and fabric trading
arm of the Future Group. FCRPL is involved in other allied
businesses, which were earlier under FCRL, including mobile
connection services in a tie-up with Tata DoCoMo under the brand,
T24, the customer loyalty programme, Payback, the leasing of
information technology assets (software as well as hardware) and
management consultancy services.
GANESH INDUSTRIES: ICRA Keeps B+ on INR10cr Debt in Not Cooperating
-------------------------------------------------------------------
ICRA has continued the long-term ratings for the bank facilities of
Shri Ganesh Industries to the 'Issuer Not Cooperating' category.
The rating is now denoted as "[ICRA]B+(Stable) ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based 6.00 [ICRA]B+ (Stable) ISSUER NOT
Cash Credit COOPERATING and continues to
remain under 'Issuer Not
Cooperating' category
Unallocated 4.00 [ICRA]B+ (Stable) ISSUER NOT
COOPERATING and continues to
remain under 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best
available/dated/limited information on the issuers' performance.
Accordingly, the lenders, investors and other market participants
are advised to exercise appropriate caution while using this rating
as the rating may not adequately reflect the credit risk profile of
the entity.
SGI is a partnership firm promoted by the Mohata family and is
involved in cotton oil milling for over 40 years. The firm has an
oil mill at Khamgaon (Maharashtra) with a crushing capacity of 80
tonnes per day. The end products of crushing are cotton oil cake
and crude oil, which can be further processed into cotton refined
oil; however, the firm is not engaged in the refining. The firm has
two group companies—Shri Ganesh Veg Oil Products Pvt. Ltd. and
Anand Mahota Agro Industries Pvt. Ltd. Shri Ganesh Veg Oil Products
Pvt. Ltd. was established in 1997 when the Mohata Group took over
an existing cotton oil refinery in Khamgaon for expansion into the
refining space. At present, the company has a cotton oil mill and
a refining unit at Khamgaon. The total oil mill crushing capacity
is 40 tons per day and the capacity for the refinery is 80 tons per
day. Anand Mohata Agro Industries Pvt. Ltd., promoted by Mr. Anand
Mohata, has an oil mill and de-linting unit at Nagpur, Maharashtra.
It has a refining and crushing capacity of 80 tons per day and a
de-linting capacity of 35 tons per day.
LAXMINARAYAN INDUSTRIES: ICRA Cuts Rating on INR7.2cr Loans to B+
-----------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of
Laxminarayan Industries (LNI), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term 6.00 [ICRA]B+ (Stable) ISSUER NOT
Fund-based- COOPERATING; Rating downgraded
Cash Credit from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
category
Long-term 1.24 [ICRA]B+ (Stable) ISSUER NOT
Non-Fund COOPERATING; Rating downgraded
based from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
category
Rationale
The ratings downgrade is because of lack of adequate information
regarding Laxminarayan Industries' performance and hence the
uncertainty around its credit risk. ICRA assesses whether the
information available about the entity is commensurate with its
rating and reviews the same as per its "Policy in respect of
non-cooperation by the rated entity". The lenders, investors and
other market participants are thus advised to exercise appropriate
caution while using this rating as the rating may not adequately
reflect the credit risk profile of the entity, despite the
downgrade.
As part of its process and in accordance with its rating agreement
with Laxminarayan Industries, ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on
the best available information.
Incorporated in 1996, Laxminarayan Industries (LNI) is engaged in
the dyeing and processing of grey fabric on a job-work basis at
Surat, Gujarat. The fabric is provided by the client while the
colours and chemicals are bought by the firm for the dyeing
process. The dyed fabric is then supplied back to the customers who
may process them further and use them in manufacturing dress
materials.
NAVDANYA ENTERPRISES: ICRA Moves B Debt Ratings to Not Cooperating
------------------------------------------------------------------
ICRA has moved the ratings for the INR8.50 crore bank facilities of
Navdanya Enterprises (NE) to the 'Issuer Not Cooperating' category.
The rating is now denoted as [ICRA]B (Stable)/[ICRA]A4; ISSUER NOT
COOPERATING ICRA has been trying to seek information from the
entity so as to monitor its performance, but despite repeated
requests by ICRA, the entity's management has remained
non-cooperative. The current rating action has been taken by ICRA
basis best available/dated/limited information on the issuers'
performance. Accordingly, the lenders, investors and other market
participants are advised to exercise appropriate caution while
using this rating as the rating may not adequately reflect the
credit risk profile of the entity.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund-based- 2.50 [ICRA]B (Stable) ISSUER NOT
Cash credit COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Fund-based- 4.00 [ICRA]B (Stable) ISSUER NOT
Term loan COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Fund-based– (1.16) [ICRA]B (Stable) ISSUER NOT
Buyer's Credit COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Non-fund based– 1.74 [ICRA]B (Stable)/[ICRA]A4 ISSUER
Bank Guarantee NOT COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Untied limits 0.26 [ICRA]B (Stable)/[ICRA]A4 ISSUER
NOT COOPERATING; Rating moved to
the 'Issuer Not Cooperating'
category
Established in 2016, Navdanya Enterprises (NE) was formed as a
partnership firm by Mr. Ramawatar Kansal and Mr. Niraj Kansal for
milling of parboiled rice. The manufacturing facility of the
company is located near a high paddy growing region in Bargarh
district of Odisha and has an input milling capacity of 8 tonne per
hour (tph). The commercial production is scheduled to commence from
October 2018.
PRABHA ENGINEERS: ICRA Keeps B on INR5cr Loans in Not Cooperating
-----------------------------------------------------------------
ICRA has continued the long-term ratings for the bank facilities of
Prabha Engineers to the 'Issuer Not Cooperating' category. The
rating is now denoted as "[ICRA]B+ (Stable) ISSUER NOT
COOPERATING".
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Fund based– 2.50 [ICRA]B+ (Stable) ISSUER NOT
Term Loan COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
Fund based– 2.50 [ICRA]B+ (Stable) ISSUER NOT
Cash Credit COOPERATING; Rating continues
to remain in the 'Issuer Not
Cooperating' category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis best available/dated/
limited information on the issuers' performance. Accordingly, the
lenders, investors and other market participants are advised to
exercise appropriate caution while using this rating as the rating
may not adequately reflect the credit risk profile of the entity.
Established in 1992, Prabha Engineers is a partnership firm started
by Mr. Prabhakar Janwadkar in Kolhapur with his father. The firm
was reconstructed as proprietorship concern in 1999 which is
managed by Mr. Prabhakar and his son Mr. Yateen Janwadkar. The firm
provides machining services to Yash Metallics Private Limited which
is a group entity and to other OEMs.
QURESHI INTERNATIONAL: ICRA Reaffirms B+ Rating on INR9.9cr Loan
----------------------------------------------------------------
ICRA has reaffirmed ratings on certain bank facilities of Qureshi
International Private Limited (QIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term- 9.90 [ICRA]B+(Stable); reaffirmed
Fund based/CC and Removed from 'Issuer not
cooperating' category
Rationale
The rating reaffirmation is constrained by QIPL moderate scale of
operations with revenues dipping by 23% to INR75.33 crore in FY2019
from INR98.37 crore in FY2018 owing to lower export orders in the
buffalo meat processing industry. The revenues are expected to
remain around INR82 crore in FY2020. The rating notes its moderate
financial risk profile with gearing at 1.81 times as on March 31,
2019, interest coverage of 2.49 times and NCA/Debt of 8% for
FY2019. The company faces high customer concentration risk with the
top customer, Telangana Foods Pvt. Ltd (TFPL), contributing to 65%
of its total sales in FY2019. Further, stiff competition in the
fragmented meat processing industry limits QIPL's profitability
margins. The rating is constrained by the challenges inherent to
the buffalo meat export business, including social, political and
disease outbreak risks. However, the rating draws comfort from the
extensive experience of the promoters in the meat processing
industry and established relationship with suppliers ensuring
regular supply of buffalo carcass. Moreover, strong relationship
with customers results in repeat orders. The Stable outlook on the
[ICRA]B+ rating reflects ICRA's opinion that QIPL will benefit from
the healthy demand for buffalo meat in the export market and its
established track record in the meat processing business.
Key rating drivers and their description
Credit strengths
* Experienced promoters in meat processing industry spanning over
30 years: Founded in 1974, QIPL is involved in the sale of
processed fresh and frozen halal boneless buffalo meat and edible
offals. It runs a processing facility in Hyderabad with a freezer
capacity of 12,000MT/year. The business is owned and managed by Mr.
Yousuf Mujahid and Mr. Naveed Iqbal, who have more than three
decades of experience in the meat business.
* Established relationship with suppliers: The promoters have
established relationship with meat suppliers ensuring regular
supply of raw material. The company sources buffalo carcass from
butchers, who are a part of the Qureshi community. The butchers use
government slaughtering facility, which involves slaughtering in
halal box, dehyding, pluck removal, splitting of carcass, PM
examination and washing of carcass and sell it to QIPL. Further, it
is favourably located in Telangana, which has around 10% of India's
total buffalo population.
Credit challenges
* Moderate scale of operations: With revenue of INR75.33 crore in
FY2019 and expected revenue of INR82 crore in FY2020, the company
has a moderate scale of operation in the intensely competitive meat
processing industry. Further, the revenues declined from INR98.37
crore in FY2018 owing to lower export orders during the past two
years.
* Moderate financial risk profile: QIPL's financial risk profile
remained moderate with gearing at 1.81 times as on March 31, 2019,
interest coverage of 2.49 times and NCA/Debt of 8% in FY2019. As on
March 31, 2019, the company's total debt stood at INR15.94 crore
and comprises interest-free unsecured loans of INR5.19 crore, term
loans of INR0.76 crore and INR9.98-crore cash credit utilisation.
* Stretched liquidity position: The company's liquidity position
is tight, as reflected by high utilisation of working capital
limits in the past 15 months owing to high debtor days. The debtor
days increased to 77 days as on March 31, 2019 from 39 days as on
March 31, 2018 owing to delay in receipt of payments from its key
customers.
* Stiff competition in meat processing business: The meat
processing industry is characterised by intense competition. The
company is exposed to risks associated with processed products,
which may be exposed to disease outbreaks and the socially
sensitive nature of the industry and political risks.
Liquidity position: Stretched
QIPL's liquidity position is stretched with average working capital
limit utilisation at 99% in the past 15-month period
that ended in March 2020. The company has repayment obligations of
INR0.18 crore in FY2021 and its cash flows are expected to be
sufficient to service the debt repayment obligations.
Rating sensitivities
Positive triggers – The rating could be upgraded if the company's
scale of operations and profitability margins improve on a
sustained basis along with improved liquidity position. Specific
credit metrics that may lead to an upgrade of QIPL's rating include
OPBIDTA/Interest above 2.8 times on a sustained basis.
Negative triggers – The rating could be downgraded if there is
decline in its scale of operations, along with prolonged impact of
Covid-19 adversely affecting the company's financial performance
and liquidity position. Specific credit metrics that may lead to a
downgrade of QIPL's rating include OPBIDTA/Interest less than 2
times on a sustained basis.
QIPL is established in 1974 by Mr. Hajid Mohd Yaqoob Qureshi and is
involved in processing of fresh and frozen halal boneless buffalo
meat and edible offals. The company sources buffalo carcass from
butchers, who are a part of the Qureshi community. The butchers use
government slaughtering facility and sell to QIPL. Its processing
facility has provision for deboning, packaging and storing in the
chilling plant, which has a capacity of 12,000MT/year. In FY2017,
the company has invested INR5.10 crore in Telangana Foods Private
Limited (TFPL). TFPL is a 100% subsidiary of QIPL, which is into
processing of buffalo meat and exports to countries such as
Vietnam, China, the CIS countries, Kuwait, Iraq, West and Central
Africa. Its processing unit is in Medchal, Telangana. Further, TFPL
has the requisite approvals for export of meat and QIPL started
exporting through TFPL instead of other merchant exporters.
RSAL STEEL: ICRA Keeps D on INR277cr Bank Loans in Not Cooperating
------------------------------------------------------------------
ICRA said the ratings for the INR277.07-crore bank facilities of
RSAL Steel Private Limited (RSAL) continue to remain under the
'Issuer Not Cooperating' category. The rating is denoted as
"[ICRA]D/[ICRA]D; ISSUER NOT COOPERATING". ICRA notes that as per
an order dated September 3, 2019, the National Company Law Tribunal
(NCLT), Mumbai Bench, admitted the claim filed by Dena Bank against
RSAL, for initiating Corporate Insolvency Resolution Process (CIRP)
under Section 7 of the Insolvency & Bankruptcy Code, 2016.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long term 70.52 [ICRA]D ISSUER NOT COOPERATING;
fund based Rating continues to remain under
limits the 'Issuer Not Cooperating'
category
Short term 206.55 [ICRA]D ISSUER NOT COOPERATING;
non fund Rating continues to remain under
based limits the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis limited information on
the issuers' performance. Accordingly, the lenders, investors and
other market participants are advised to exercise appropriate
caution while using this rating as the rating may not adequately
reflect the credit risk profile of the entity.
RSAL Steel Private Limited (RSPL) was incorporated in December
2010, as a wholly-owned subsidiary of Ruchi Strips & Alloys Limited
(RSAL), a Ruchi Group company, with the objective of taking over
the steel business of the holding company. RSPL manufactures
cold-rolled steel coils (CRC), with an installed capacity of 1 lakh
metric tonne (MT) per annum. RSPL also trades in various
commodities such as soya meal, CRC steel etc.
SP SUPERFINE COTTON: ICRA Keeps 'D' Debt Rating in Not Cooperating
------------------------------------------------------------------
ICRA said the ratings for the INR103.46 crore bank facilities of SP
Superfine Cotton Mills Private Limited to remain under Issuer Not
Cooperating category. The long-term rating is denoted as [ICRA]D
ISSUER NOT COOPERATING.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 8.00 [ICRA]D; ISSUER NOT COOPERATING;
FundBased/CC Rating Continues to remain under
the 'Issuer Not Cooperating'
category
Long Term- 66.94 [ICRA]D; ISSUER NOT COOPERATING;
Fund Based TL Rating Continues to remain under
the 'Issuer Not Cooperating'
category
Long Term- 28.52 [ICRA]D; ISSUER NOT COOPERATING;
Unallocated Rating Continues to remain under
the 'Issuer Not Cooperating'
category
ICRA has been trying to seek information from the entity so as to
monitor its performance, but despite repeated requests by ICRA, the
entity's management has remained non-cooperative. The current
rating action has been taken by ICRA basis dated information on the
issuers' performance. Accordingly, the lenders, investors and other
market participants are advised to exercise appropriate caution
while using this rating as the rating may not adequately reflect
the credit risk profile of the entity.
Promoted by Mr. Velusamy in 1995, SSCMPL manufactures cotton yarn
in the count range of 40s to 80s, with 40-50s forming a major share
of the production. The company has an installed capacity of 28,224
spindles and its spinning unit is located in Attur, Tamil Nadu.
SRINIVASA EDUCATIONAL: ICRA Assigns B+ Rating to INR6.07cr Loan
---------------------------------------------------------------
ICRA has assigned rating to the bank facilities of Srinivasa
Educational Trust (SET), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Term Loan 6.07 [ICRA]B+ (Stable) Assigned
Unallocated
facility 4.18 [ICRA]B+ (Stable) Assigned
Rationale
The rating favorably considers the established brand name of the
Adhiyaman Group and the experience of the trustees of SET in the
education sector for over two decades. The rating derives comfort
from the healthy long-term demand for primary and secondary
education in Tamil Nadu, especially for the CBSE curriculum. ICRA
notes the ongoing debt-funded capital expenditure for expansion of
the CBSE school, which will support the revenue growth in future,
despite exposing the trust to risk related to timely project
completion within budgeted costs and subsequent achievement of
desired admission levels. The rating factors in the highly
regulated nature of the education sector in the state and the
intense competition in the sector. However, the trust's established
brand presence and the proven track record mitigate the risk to
some extent. The rating notes its exposure to inherent cash flow
mismatches, which necessitates prudent cash flow management. The
Stable outlook on the [ICRA]B+ rating reflects ICRA's opinion that
SET will continue to benefit from the extensive experience of the
Trustees and the established brand presence of the Group in the
locality.
Key rating drivers and their description
Credit strengths
* Presence of Adhiyaman Group in educational sector for more than
two decades: SET was established by Mr. S. Thirumalmurugan in
1992. It runs four educational institutions in Uthangarai, Tamil
Nadu. The management is actively involved in the operations of all
the four institutions. Robust demand for primary and secondary
education in India under CBSE curriculum – While the state board
syllabus is preferred at the secondary level, CBSE curriculum is
increasingly gaining popularity in the primary and secondary
levels. This coupled with the established brand image of the
Adhiyaman Group would help in attracting students.
Credit challenges
* Ongoing debt-funded capital expenditure to impact capital
structure and coverage indicators: The trust has an ongoing
debt-funded capex towards expansion of the CBSE school. It is
expected to incur INR5.0 crore in the current fiscal and the next
fiscal, respectively. Term loans secured for the expansion are
likely to impact the capital structure and coverage indicators
further. Its ability to commence operations and achieve the desired
admission levels in the new projects, in a timely manner, with
limited cost overrun remains the key rating monitorable.
* Lack of geographical diversification and stiff competition from
other institutions in vicinity: All the four institutions under
the trust are located in Uthangarai, Tamil Nadu, thus, leading to
high geographical concentration risk. Moreover, these institutions
face stiff competition from other reputed institutions in the
vicinity, which puts pressure to attract fresh students. However,
as the Adhiyaman Group has an established brand presence and has
been consistently producing academic achievements across all its
schools, SET has been insulated from the competition, to some
extent.
* Lumpiness in cash flows could lead to misallocations: SET
collects fees on a half-yearly basis, whereas the servicing of
debt obligations happens on a monthly basis. Hence, the trust is
exposed to the inherent cash flow mismatches, thereby making
appropriate treasury operations critical for regular debt
servicing.
Liquidity position: Stretched
SET's liquidity is stretched given the huge repayment obligation of
about INR2.51 crore in FY2020. Moreover, the debt replayment is
expected to increase further in FY2021 with additional loans likely
to be secured for expansion of the CBSE school. ICRA takes note of
the lumpy nature of cash flows as against more periodic repayment
obligations, which necessitates prudent cash flow management to
ensure regular debt servicing.
Rating sensitivities
Positive triggers – ICRA could upgrade SET's rating if there is
an improvement in DSCR to greater than 1.1 times and ROCE more than
10%.
Negative triggers – ICRA could downgrade SET's rating if there is
any stretch in the cash flows due to delay in expansion of the CBSE
school leading to lower-than-expected admissions levels.
Established in 1992, SET is one of the well-established education
institutions offering primary, secondary and higher education in
Krishnagiri, Tamil Nadu. It was established by Dr. S.
Thirumalmurugan and the trust runs four educational institutions
located in Uthangiri, Krishnagiri, at present. For the academic
year (AY) 2019-2020, SET has a total student strength of about
6,680 students as against 6,667 students in AY2018-2019.
SUDAMO IMPEX: ICRA Lowers Rating on INR5.50cr Loan to B+
--------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of Sudamo
Impex Private Limited (SIPL), as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term 5.50 [ICRA]B+ (Stable) ISSUER NOT
Fund-based- COOPERATING; Rating downgraded
Cash Credit from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
category
Long-term 5.17 [ICRA]B+ (Stable) ISSUER NOT
Fund-based- COOPERATING; Rating downgraded
Term Loan from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
category
Long-term– 3.08 [ICRA]B+ (Stable) ISSUER NOT
Unallocated COOPERATING; Rating downgraded
from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
category
Long-Term- (7.68) [ICRA]B+ (Stable) ISSUER NOT
Interchangeable COOPERATING; Rating downgraded
from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
category
Rationale
The ratings downgrade is because of lack of adequate information
regarding SIPL's performance and hence the uncertainty around its
credit risk. ICRA assesses whether the information available about
the entity is commensurate with its rating and reviews the same as
per its "Policy in respect of non-cooperation by the rated entity".
The lenders, investors and other market participants are thus
advised to exercise appropriate caution while using this rating as
the rating may not adequately reflect the credit risk profile of
the entity, despite the downgrade.
As part of its process and in accordance with its rating agreement
with Sudamo Impex Private Limited, ICRA has been trying to seek
information from the entity so as to monitor its performance, but
despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 01, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Incorporated in 2006, Sudamo Impex Private Limited (SIPL) is
engaged in manufacturing polyester synthetic fabrics for suitings,
shirtings, sarees, dress materials, embroidered fabrics, and home
textiles. The company's registered office is in Surat (Gujarat) and
its weaving unit is at Palsana in Surat. It is part of the
Madhusudan Group, which has been engaged in the textile sector
since 1982.
SUDARSHAN TEXTILES: ICRA Lowers Rating on INR3.04cr Loan to B+
--------------------------------------------------------------
ICRA has revised the ratings on certain bank facilities of
Sudarshan Textiles Private Limited, as:
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long-term 2.50 [ICRA]B+ (Stable) ISSUER NOT
Fund-based- COOPERATING; Rating downgraded
Cash Credit from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
category
Long-term 3.04 [ICRA]B+ (Stable) ISSUER NOT
Fund-based- COOPERATING; Rating downgraded
Term Loan from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
category
Long-term– 0.96 [ICRA]B+ (Stable) ISSUER NOT
Unallocated COOPERATING; Rating downgraded
from [ICRA]BB (Stable) and
continues to remain under
'Issuer Not Cooperating'
category
Rationale
The ratings downgrade is because of lack of adequate information
regarding Sudarshan Textiles Private Limited's performance and
hence the uncertainty around its credit risk. ICRA assesses whether
the information available about the entity is commensurate with its
rating and reviews the same as per its "Policy in respect of
non-cooperation by the rated entity". The lenders, investors and
other market participants are thus advised to exercise appropriate
caution while using this rating as the rating may not adequately
reflect the credit risk profile of the entity, despite the
downgrade.
As part of its process and in accordance with its rating agreement
with Sudarshan Textiles Private Limited, ICRA has been trying to
seek information from the entity so as to monitor its performance,
but despite repeated requests by ICRA, the entity's management has
remained non-cooperative. In the absence of requisite information
and in line with SEBI's Circular No. SEBI/HO/MIRSD4/CIR/2016/119,
dated November 1, 2016, ICRA's Rating Committee has taken a rating
view based on the best available information.
Incorporated in 1994, Sudarshan Textiles Private Limited (STPL) is
engaged in the dyeing and processing of grey fabric at Surat,
Gujarat. The fabric is provided by the client, while colours and
chemicals are bought by the firm for the dyeing process. The dyed
fabric is then supplied back to the customers, who may process them
further and use them in manufacturing dress materials.
=================
I N D O N E S I A
=================
STAR ENERGY: Fitch Affirms BB- on $580MM Senior Secured Notes
-------------------------------------------------------------
Fitch Ratings has affirmed Star Energy Geothermal Ltd.'s USD580
million fully amortising 6.75% senior secured notes due 2033 at
'BB-'. The Outlook is Stable.
RATING RATIONALE
The project benefits from long-term contracts to use geothermal
resources and sell electricity to Indonesian state-owned power
company PT Perusahaan Listrik Negara (PLN, BBB/Stable). The
take-or-pay nature of the electricity sales contract with PLN
eliminates most volume and merchant price risks. Fitch expects the
supply of geothermal resource to be reliable, subject to
appropriate and timely well maintenance and drilling of new wells.
The coronavirus pandemic has limited impact on SEG's operations.
The operations team is divided into four groups, who work on a
14-working-day roster and staff reside at the plant during the 14
working days to minimise the infection risk. Management confirmed
that PLN has continued to make payments on time and there is no
deterioration in SEG's receivables profile.
Due to the lockdown imposed in Indonesia, electricity demand from
businesses and industries has declined, but is partly offset by
higher household demand. Management expects PLN to only dispatch
around the take-or-pay level (95% of capacity). Lower dispatch and
revenue, however, could be offset by lower operating expenses due
to weakening of the Indonesian rupiah against the US dollar.
SEG's financial profile under the Fitch rating case shows an
average annual debt service coverage ratio of 1.24x and a minimum
of 1.03x. The low level of excess cash generation could limit SEG's
ability to fund necessary capital expenditures if they need to be
accelerated, or other unexpected costs. The metrics are appropriate
for a 'BB-' rated facility of this type under Fitch's Renewable
Energy Project Rating Criteria.
KEY RATING DRIVERS
Robust Operating Record, Inherent Volatility in Resource Supply:
Operation Risk - Weaker
SEG has ample operating experience and a strong record with very
high average availability and capacity factors (excluding an outage
in 2015) for both of its generation units since they started
operations. However, SEG operates the units, which could expose it
to the risks of cost overruns and operational underperformance.
The power plant suffered an extended outage in 2015 due to a
landslide that damaged a steam pipeline, although SEG has made
considerable changes to reduce the probability of such an event
recurring. SEG completed countermeasure works at all high-risk
areas in 2019.
Operating costs have generally been decreasing over the past few
years due to budget discipline and depreciation of the rupiah
against the US dollar. SEG has a detailed capital investment plan
for drilling new wells and maintaining existing wells, which the
external technical consultant GeothermEx has reviewed and is
satisfied with. However, GeothermEx has also advised that given the
nature of the geothermal assets, there is considerable uncertainty
regarding the timing of the capex. In the latest round of make-up
well drilling, the plant achieved steam supply addition that was
better than targeted at a cost lower than budgeted.
The lack of a detailed operating cost analysis by a third-party
technical advisor constrains its assessment. For major drilling
programmes (capex exceeding USD100 million over two years), a
reserve account will prefund 25% of the well drilling costs, for
each half-year period, over the next two years. The reserve account
will also cover planned major maintenance costs for six months.
Resource Supply Validated by Consultant: Revenue Risk - Volume -
Midrange
The volatility and decline in steam supply inherent in the
geothermal resource introduces supply risk to electricity
generation, but SEG has managed to keep the steam depletion rate
lower than previously forecast through a well-intervention
programme and drilling of make-up wells. The existing geothermal
resources are sufficient to support 280MW of electricity generation
for 30 years or 390MW of electricity generation for 20 years,
according to GeothermEx's technical report in February 2018.
Curtailment risk is limited by the take-or-pay nature of the
electricity sales contract under which PLN is required to pay for
95% of the rated capacity of each of the two generators if it is
not dispatched.
Supportive Long-Term Power Purchase Agreement: Revenue Risk - Price
- Stronger
The electricity tariffs are largely fixed under the ESC. The price
for electricity produced by Unit 1 may be renegotiated after 2030,
but SEG would be required to add USD50 million to the debt reserve
account from 2028, which will provide a cash cushion if the
renegotiation does not yield similar or better terms.
The tariffs are indexed using straightforward, broad-based publicly
available indexation formulas. The tariffs are denominated in US
dollars but partially indexed to the US dollar-rupiah exchange
rate, such that SEG's revenue in US dollars will decline if the
rupiah depreciates against the US dollar. However, the cash flow
impact of lower revenue is partially offset by lower operating
costs in US dollar terms as most of the operating costs, such as
labour, are denominated in rupiah. SEG does not enter into
foreign-exchange hedges, leaving it exposed to exchange-rate risk.
Fully Amortising Debt: Debt Structure - Midrange
The seniority, full amortisation and fixed coupon of the USD580
million bonds are features of a debt structure that would be
assessed as a 'Stronger' attribute under Fitch's key rating driver
assessment of renewable projects. SEG may have to pay higher coupon
rates if it issues debt to fund the development of Unit 3, and the
new debt would be required to meet a projected DSCR of 1.3x. The
existing notes may not have security over the new assets and may
not have access to the cash flow from Unit 3 for debt service if
this additional debt is structured as a new debt tranche instead of
additional notes issued from the current tranche.
The six-month debt service reserve account is a feature of a
'Midrange' debt structure. The lock-up regime at 1.1x look-back
DSCR is not particularly robust and is weaker than that of some
peers. The debt amortisation results in steady deleveraging, but
the annual cash flow and DSCRs are volatile. Overall, Fitch
assesses the debt structure as 'Midrange'.
PEER GROUP
Fitch has rated other geothermal projects below investment grade
due mainly to uncertainty about resource depletion and lack of
substitute fuel or volatile pricing mechanisms. In particular, the
default of Coso Geothermal Power Holdings LLC highlights the
resource depletion risk inherent in geothermal projects. OrCal
Geothermal LLC's senior notes were rated at 'BB' with Stable
Outlook before they were fully repaid in 2019. OrCal relied on
continuing capital contribution by the sponsor to fund
discretionary capital expenditures and its standalone DSCRs were
below breakeven.
SEG has a better price risk attribute than peers as a result of its
long-term take-or-pay power purchase agreement with PLN, and its
resources have been validated through studies by external
consultants. The annual DSCR projections in Fitch's rating case
indicate a robust coverage averaging 1.24x over the debt term.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Projected average DSCR above 1.35x in Fitch's rating case.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- The projected average DSCR dropping below 1.25x in Fitch's
rating case as a result of production declines or interruptions,
operating difficulties, additional debt, or other factors.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Public Finance issuers have a
best-case rating upgrade scenario (defined as the 99th percentile
of rating transitions, measured in a positive direction) of three
notches over a three-year rating horizon; and a worst-case rating
downgrade scenario (defined as the 99th percentile of rating
transitions, measured in a negative direction) of three notches
over three years. The complete span of best- and worst-case
scenario credit ratings for all rating categories ranges from 'AAA'
to 'D'. Best- and worst-case scenario credit ratings are based on
historical performance.
TRANSACTION SUMMARY
SEG is part of the Star Energy Group, the largest geothermal energy
producer in Indonesia and the third largest in the world. SEG has
the exclusive right to use geothermal resources in the Wayang Windu
area in West Java, Indonesia, about 40km south of the city of
Bandung. SEG operates two power generation units with a combined
gross installed capacity of 227MW. Unit 1 is 110MW and began
commercial operations in June 2000, while Unit 2 is 117MW and
started in March 2009.
CREDIT UPDATE
SEG continued to maintain strong operational performance, with high
availability factor of 98.2% in 2019, which was better than
management expectation of 97.4%, due to faster-than-expected
completion of maintenance of Unit 1. The net capacity factor
dropped slightly to 95.4% due to curtailment by PLN. However,
curtailment risk is limited given the take-or-pay arrangement of
the ESC under which PLN is required to pay for 95% of the rated
capacity if it does not offtake all electricity nominated.
Revenue decreased slightly in 2019, as higher realised tariff was
offset by lower net dispatch. Operating expense also declined due
mainly to a weakening rupiah against the US dollar and budget
discipline. Overall, EBITDA fell in 2019 but was above management
projection.
The latest round of make-up well drilling achieved steam supply
addition that was better than targeted and at a lower than
budgeted. Some well-pad construction capex budgeted in 2019 was
postponed to 2020 due to delays in obtaining land-use permits and
it is now further postponed to 2021 due to management's intention
to minimise fieldwork activities in the near term due to the
pandemic since those well pads will be used for the 2020-2021
drilling campaign. SEG has completed all the land stabilisation
works at high geohazard risk areas previously identified.
In the near term, lower US and Indonesia inflation, as well as
weakening in the rupiah against the US dollar, will result in lower
US dollar-denominated electricity tariffs, but this will be partly
offset by lower operating expenses. The pandemic has led to lower
business and industry electricity consumption, although household
demand increased as more people worked from home. Management
expects PLN to dispatch around the take-or-pay level in the near
term.
FINANCIAL ANALYSIS
The Fitch base case assumes a capacity factor of 97% for both
generation units, and uses management's forecast for operating
expenses and capex. SEG has an average annual DSCR of 1.38x and a
minimum DSCR of 1.20x under the base case.
The Fitch rating case assumes a capacity factor of 95% for both
units, which is equal to the lowest level in recent years. It also
assumes that major overhauls of the power plants are performed
every three years (as they have been historically), compared with
every four years in management's assumptions. Its rating case also
applies a 15% stress to management's assumptions for operating
expenses and a 5% stress to capex. The Fitch rating case results in
an average ADSCR of 1.24x and a minimum DSCR of 1.03x. The achieved
coverage level reflects the higher lifecycle capex risks associated
with geothermal facilities compared with other renewable projects,
and is appropriate for a 'BB-' rating, although it is above the
'BB-' threshold of 1.20x for concentrated solar power projects in
Fitch's Renewable Energy Projects Rating Criteria.
=====================
N E W Z E A L A N D
=====================
[*] Fitch Takes Action on 11 Tranches From 2 Avanti Deals
---------------------------------------------------------
Fitch Ratings has taken rating actions on two Avanti RMBS Trusts,
which consist of notes backed by pools of first-ranking,
predominantly prime, New Zealand residential full- and
low-documentation mortgage loans originated by Avanti Finance
Limited. The notes were issued by The New Zealand Guardian Trust
Company Limited.
Fitch has upgraded the class D notes and affirmed the remaining
four tranches in Avanti RMBS 2018-1 Trust to reflect credit
enhancement build-up. Fitch has concurrently downgraded the class D
note and affirmed the remaining five tranches in Avanti RMBS 2019-1
Trust. The class D note was downgraded because it was affected by
worsening arrears in the portfolio. Future build-up of credit
enhancement through sequential pay down of notes may be limited
given Fitch's expectations of increased defaults due to the
coronavirus pandemic and economic fallout.
For Avanti 2018-1, the social and market disruptions caused by the
coronavirus and related containment measures did not negatively
affect the ratings because there is sufficient credit enhancement
to cover expected higher defaults, and because Fitch views
liquidity protection as sufficient to support the current ratings.
The Stable Outlook on all of the notes from Avanti 2018-1 and the
senior notes (classes A1, A2, B, and C) from Avanti 2019-1 reflect
the liquidity support and the notes' ability to withstand the
sensitivity to higher defaults stemming from the pandemic.
For Avanti 2019-1, the disruptions led to the class D being placed
on Rating Watch Negative and the Outlook on the class E notes being
revised to Negative from Stable. This is because the notes have not
yet built up credit enhancement sufficient to cover the potential
increase in defaults as a result of the pandemic. The potential
rise in defaults does not have any rating impact on classes A, B
and C, which is in line with Fitch's approach of rating "through
the cycle" approach. Under this approach, lower rating levels tend
to be more vulnerable to deterioration in macroeconomic
conditions.
The Rating Watch Negative on the class D notes from Avanti 2019-1
reflects the heightened probability of a negative rating change in
the short term, driven by the economic impact of the pandemic and
the related containment measures. The class D notes are sensitive
to the expected increase in defaults under the base-case scenario
as a result of the pandemic.
The Negative Outlook on the class E notes from Avanti 2019-1
reflects the potential for a rating downgrade as the economic
downturn is likely to affect transactions with a
larger-than-average exposure to self-employed borrowers, who are
viewed to be the most vulnerable in the current crisis due to
income volatility and rapid job losses. The rating on the class E
notes is not currently sensitive to the expected increase in
defaults under the base-case scenario, but further deterioration
over a longer term is expected to result in a negative rating
change.
Avanti RMBS 2018-1 Trust
- Class A1 NZAUAD1001R6; LT AAAsf; Affirmed
- Class A2 NZAUAD1002R4; LT AAAsf; Affirmed
- Class B NZAUAD1003R2; LT AA+sf; Affirmed
- Class C NZAUAD1004R0; LT A+sf; Affirmed
- Class D NZAUAD1005R7; LT A-sf; Upgrade
Avanti RMBS 2019-1 Trust
- Class A1 NZAVAD1007R1; LT AAAsf; Affirmed
- Class A2 NZAVAD1008R9; LT AAAsf; Affirmed
- Class B NZAVAD1009R7; LT AAsf; Affirmed
- Class C NZAVAD1010R5; LT Asf; Affirmed
- Class D NZAVAD1011R3; LT BBB-sf; Downgrade
- Class E NZAVAD1012R1; LT BBsf; Affirmed
KEY RATING DRIVERS
Coronavirus-Related Stresses
Fitch has made assumptions about the spread of the coronavirus and
the economic impact of the related containment measures. As a
base-case (most likely) scenario, Fitch assumes a severe global
recession in 1H20 driven by sharp economic contractions in major
economies with a rapid spike in unemployment, followed by a
recovery that begins in 3Q20 as the health crisis subsides. As a
downside (sensitivity) scenario in the Rating Sensitivities, Fitch
takes into consideration a more severe and prolonged period of
stress with recovery to pre-crisis GDP levels delayed until around
the middle of the decade.
The measures put in place to limit the spread of the virus are
affecting New Zealand's economy, with many businesses temporarily
shut with little or no income. Fitch expects this to have an impact
on the performance of mortgages, and have a negative rating effect
on the junior notes in Avanti 2019-1. This is because subordinate
rating levels are more vulnerable to changes in macroeconomic
conditions and the transaction has not yet built up credit
enhancement sufficient to cover potential higher defaults stemming
from the pandemic. The senior notes (rated Asf and above) in both
transactions can absorb Fitch's base-case scenario of
coronavirus-related impacts. In addition, the 'AAAsf' rated notes
have subordination that is between 2.6x (Avanti 2019-1) and 3.0x
(Avanti 2018-1), which are greater than the 'AAAsf' portfolio
loss.
Liquidity Risk from Payment Holidays: Fitch has reviewed the
ability of these transactions to withstand a significant proportion
of borrowers being offered, and taking up, a payment holiday. These
transactions benefit from liquidity facilities sized at 1.5% of
outstanding note balance and a funded reserve (for Avanti 2018-1
Trust only), which would be able to cover the entire portfolio
taking up a payment holiday for six months assuming there are no
principal or interest collections.
Operational Risk: Avanti is a non-bank financial institution with
over 25 years of experience in origination, underwriting, servicing
and special servicing across various asset classes in New Zealand.
Fitch undertook an onsite operational review and found that the
operations of the originator and servicer were comparable with
market standards and that there were no material changes that may
affect Avanti's ongoing ability to undertake origination,
administration and collection activities. The collections and
servicing activities have not been disrupted due to the coronavirus
outbreak as staff work remotely and are able to access the disaster
recovery site, if needed. Avanti's arrears performance differs from
other prime non-bank lenders; therefore, Fitch applied a lender
adjustment of 1.05x to address the possible difference in
foreclosure frequency, in line with previous analysis of Avanti
transactions.
Asset Analysis: The asset model was re-run for both transactions,
in accordance with Fitch's criteria. The 'AAAsf' weighted-average
foreclosure frequency for Avanti 2018-1 and Avanti 2019-1 is 17.2%
and 21.5%, respectively. The WAFF of Avanti 2018-1 is driven
primarily by the weighted average unindexed loan/value ratio of
63.0% and under Fitch's methodology, non-conforming loans of 39.3%
and investment loans of 16.3% of the pool. The 'AAAsf' WA recovery
rate of 54.5% is driven by the portfolio's WA indexed scheduled LVR
of 60.7% and WA market value decline of 60.9%. The WAFF of Avanti
2019-1 is driven primarily by the weighted average unindexed
loan/value ratio of 67.7% and under Fitch's methodology,
non-conforming loans of 44.3% and investment loans of 18.4% of the
pool. The 'AAAsf' WA recovery rate of 51.2% is driven by the
portfolio's WA indexed scheduled LVR of 66.3% and WA market value
decline of 61.0%.
There have been no losses in either trust since closing despite 30+
day arrears that are higher than Fitch's Australian Prime and
Non-Conforming 4Q19 indices of 1.1% and 5.0%, respectively. The 30+
day arrears at end-March 2020, which were 5.1% for the Avanti
2019-1 and 7.5% for Avanti 2018-1, comprised mainly of loans that
are 30-59 days in arrears, loans that are in late stage arrears
(90+ days) making up less than 1.2% of the arrears in both trusts.
Higher arrears do make the subordinated tranches more susceptible
to macroeconomic stresses such as the current conditions amid the
pandemic. Arrears as a percentage of the total collateral have also
been amplified by the significant amortisation of the transactions
and their small pool balances (less than NZD150 million). This is
also evident in the relatively stable arrears as a balance of the
transactions over time.
The historically observed annualised conditional prepayment rates
for both trusts were about 30% as at the April 2020 payment
reporting. Fitch increased the high prepayment stress assumption
specified in the APAC Residential Mortgage Rating Criteria to 42%
from 33% over the next three years in its cash flow modelling. From
year 4, Fitch applied the standard criteria high prepayment stress
assumption for the remaining life of the portfolios to reflect the
expectation that prepayment speeds will slow down as better-quality
borrowers exit the pools first. As the portfolios have
above-market-average asset margins, the threshold margin was capped
at 1.0x its WA asset margin for both transactions.
Liability Analysis: Full cash flow analysis was performed on both
trusts. At the February payment date, Avanti 2018-1's A1, A2, B, C
and D notes benefit from current credit enhancement of 39.3%,
21.2%, 15.4%, 10.9% and 7.2%, respectively while Avanti 2019-1's
A1, A2, B, C, D and E notes benefit from current credit enhancement
of 33.6%, 16.9%, 12.6%, 8.2%, 4.9% and 3.3%, respectively.
Structural features include a liquidity facility sized at 1.5% of
the total invested note balance that is available to cover
shortfalls and strong excess spread that is available to cover
losses, across both transactions. Avanti 2018-1 also features a
liquidity reserve fund sized at 0.5% that is available to cover
shortfalls on the class C and class D notes and further supports
the transaction.
All classes of notes from Avanti 2018-1 and classes A1, A2, B and E
from Avanti 2019-1 can withstand stresses either at or higher than
their existing rating level. However, Fitch limited upgrades on the
notes, other than the class D notes from Avanti 2018-1, given the
high 30+ day arrears compared to Fitch's Australian Prime and
Non-Conforming Dinkum RMBS Indices and the relatively short
historically observed performance of the transactions.
The class D notes from Avanti 2019-1 can only withstand 'BBB-sf'
stresses due to the higher foreclosure frequency of the current
pool compared to the closing pool. The increase is primarily driven
by arrears in the portfolio. The current build-up of credit
enhancement is not sufficient to cover this increase in foreclosure
frequency.
The class B to E notes from Avanti 2018-1 and B to F notes from
Avanti 2019-1 pay interest based on the notes' stated balance.
Fitch's ratings reflect the timely and ultimate payment of interest
and its cash flow model addresses the risk that interest may be not
be recovered in scenarios where there are charge-offs. This is more
conservative than transaction documentation. All classes of notes
can withstand all relevant rating Fitch cash-flow modelling
stresses.
Macroeconomic Factors: Fitch expects mortgage performance in New
Zealand to deteriorate in the near term. Fitch currently forecasts
New Zealand's GDP to shrink by 5.9% in 2020 with unemployment
rising to 7.9%. This is partially offset by a low Official Cash
Rate of 0.25% and the application of both central bank and
government stimulus measures. In the medium term, Fitch expects GDP
growth to bounce back to 5.0% in 2021 and the unemployment rate to
fall to 6.8%.
ESG - Social: Avanti 2018-1 and Avanti 2019-1 have ESG Relevance
Scores of 4 for Exposure to Social Impacts because its cash flow
analysis takes into account the limited ability of the mortgage
lender to reprice loans as a result of borrowers paying
above-market rates, which has a negative impact on the credit
profile and is relevant to the ratings in conjunction with other
factors.
RATING SENSITIVITIES
Unanticipated increases in the frequency of defaults and loss
severity on defaulted receivables could produce loss levels higher
than Fitch's base case and are likely to result in a decline in
credit enhancement and remaining loss-coverage levels available to
the notes. Decreased credit enhancement may make certain note
ratings susceptible to negative rating action, depending on the
extent of the coverage decline. Hence, Fitch conducts sensitivity
analysis of the ratings by stressing the transaction's initial
base-case assumptions.
Avanti 2018-1:
Expected impact on note ratings of increased defaults:
Notes: A1 and A2/ B / C/ D / E
Rating: AAAsf / AAAsf / AA+sf / A+sf / A-sf
Increase defaults by 15%: AAAsf / AAAsf / AA+sf / A+sf / A-sf
Increase defaults by 30%: AAAsf / AAAsf / AAsf / A+sf / A-sf
Expected impact on note ratings of decreased recoveries:
Notes: A1 and A2/ B / C/ D / E
Rating: AAAsf / AAAsf / AA+sf / A+sf / A-sf
Reduce recoveries by 15%: AAAsf / AAAsf / AAsf / A+sf / A-sf
Reduce recoveries by 30%: AAAsf / AAAsf / A+sf / A-sf / A-sf
Expected impact on note ratings of multiple factors:
Notes: A1 and A2/ B / C/ D / E
Rating: AAAsf / AAAsf / AA+sf / A+sf / A-sf
Increase defaults by 15% and reduce recoveries by 15%: AAAsf /
AAAsf / AA-sf / Asf / A-f
Increase defaults by 30% and reduce recoveries by 30%: AAsf / AAsf
/ A-sf / BBBsf / BBBsf
Upgrade Sensitivity:
Rating sensitivity to decreased charge-offs:
Notes: A1 and A2/ B / C/ D / E
Rating: AAAsf / AAAsf / AA+sf / A+sf / A-sf
Decrease defaults by 15% and increase recoveries by 15%: AAAsf /
AAAsf / AAAsf / AAAsf / AAAsf
Avanti 2019-1
Expected impact on note ratings of increased defaults:
Notes: A1 and A2/ B / C/ D / E / F
Rating: AAAsf / AAAsf / AAsf / Asf / BBB-sf / BBsf
Increase defaults by 15%: AAAsf / AAAsf / AAsf / A-sf / BB+sf /
BBsf
Increase defaults by 30%: AA+sf / AA+sf / AA-sf / A-sf / BBsf /
BB-sf
Expected impact on note ratings of decreased recoveries:
Notes: A1 and A2/ B / C/ D / E / F
Rating: AAAsf / AAAsf / AAsf / Asf / BBB-sf / BBsf
Reduce recoveries by 15%: AAAsf / AAAsf / AAsf / BBB+sf / BB-sf /
B+sf
Reduce recoveries by 30%: AA+sf / AA+sf / A+sf / BBBsf /
Expected impact on note ratings of multiple factors:
Notes: A1 and A2/ B / C/ D / E / F
Rating: AAAsf / AAAsf / AAsf / Asf / BBB-sf / BBsf
Increase defaults by 15% and reduce recoveries by 15%: AA+sf /
AA+sf / A+sf / BBBsf / B+sf / Bsf
Increase defaults by 30% and reduce recoveries by 30%: AA-sf /
AA-sf / A-sf / BBsf /
Upgrade Sensitivity:
Rating sensitivity to decreased charge-offs:
Notes: A1 and A2/ B / C/ D / E / F
Rating: AAAsf / AAAsf / AAsf / Asf / BBB-sf / BBsf
Decrease defaults by 15% and increase recoveries by 15%: AAAsf /
AAAsf / AAAsf / AAsf / A-sf / BBB+sf
Coronavirus Downside Scenario Sensitivity
Under Fitch's downside scenario, re-emergence of infections in the
major economies prolongs the health crisis and confidence shock,
prompts extensions or renewals of lockdown measures and prevents a
recovery in financial markets. Fitch tested this scenario by
increasing the defaults by 15% at 'AAAsf' to 53% at 'Bsf' and
reducing recoveries by 15% across all rating levels:
Avanti 2018-1
Notes: A1 and A2/ B / C/ D / E
Rating: AAAsf / AAAsf / AA+sf / A+sf / A-sf
Expected coronavirus downside impact on note ratings of multiple
factors: AAAsf / AAAsf / AA-sf / A-sf / A-sf
Avanti 2019-1
Notes: A1 and A2/ B / C/ D / E / F
Rating: AAAsf / AAAsf / AAsf / Asf / BBB-sf / BBsf
Expected coronavirus downside impact on note ratings of multiple
factors: AA+sf / AA+sf / A+sf / BBB-sf /
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
- Increased credit enhancement ratios that are able to fully
compensate for the credit losses and cash flow stresses
commensurate with higher rating scenarios, all else being equal.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
- A longer-than-expected coronavirus crisis that weakens
macroeconomic fundamentals and consumers' financial position in New
Zealand beyond Fitch's current baseline scenario. Credit
enhancement ratios cannot fully compensate for the credit losses
and cash flow stresses associated with the assigned ratings, all
else being equal.
CRITERIA VARIATION
Fitch has observed that conditional prepayment rates for Avanti are
higher than Fitch's base prepayment expectations for New Zealand
residential mortgages. As a result, the high prepayment stress
assumption specified in the APAC Residential Mortgage Rating
Criteria was increased to 42% for one year, reducing to 33%, on a
linear basis by year four to reflect possible further increases to
the currently observed base prepayment rates. There were no changes
to the low prepayment stress assumption of 8%. The impact of the
variation was a one-notch difference in the model-implied rating
for class E in Avanti 2019-1 and there was no rating impact on any
other classes in either trust.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Structured Finance
transactions have a best-case rating upgrade scenario (defined as
the 99th percentile of rating transitions, measured in a positive
direction) of seven notches over a three-year rating horizon; and a
worst-case rating downgrade scenario (defined as the 99th
percentile of rating transitions, measured in a negative direction)
of seven notches over three years. The complete span of best- and
worst-case scenario credit ratings for all rating categories ranges
from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings
are based on historical performance.
USE OF THIRD-PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by,
Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the
information it has received about the performance of the asset pool
and the transaction. There were no findings that were material to
this analysis. Fitch has not reviewed the results of any
third-party assessment of the asset portfolio information as part
of its ongoing monitoring.
Prior to the transactions closing, Fitch sought to receive a
third-party assessment conducted on the asset portfolio
information, but none was available for these transactions.
As part of its ongoing monitoring, Fitch conducted a review of a
small targeted sample of Avanti's origination files and found the
information contained in the reviewed files to be adequately
consistent with the originator's policies and practices and the
other information provided to the agency about the asset
portfolio.
Overall, Fitch's assessment of the asset pool information relied
upon for the agency's rating analysis, according to its applicable
rating methodologies, indicates that it is adequately reliable.
SOURCES OF INFORMATION
The data used to develop the rating included the following
information from the following sources:
- Issuer and servicer report as of the interest payment date in
February 2020 and provided by Avanti; and
- Discussions with, and updates from, the servicer in April
2020.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
RATING
The principal sources of information used in the analysis are
described in the Applicable Criteria.
The issuer has informed Fitch that not all relevant underlying
information used in the analysis of the rated notes is public.
ESG CONSIDERATIONS
Avanti RMBS 2018-1 Trust and Avanti RMBS 2019-1 Trust have ESG
Relevance Scores of 4 for Exposure to Social Impacts as its cash
flow analysis takes into account the limited ability of the
mortgage lender to reprice loans as a result of borrowers paying
above-market rates, which has a negative effect on the credit
profile and is relevant to the ratings in conjunction with other
factors.
Except for the matters discussed, the highest level of ESG credit
relevance, if present, is a score of 3 - ESG issues are credit
neutral or have only a minimal credit impact on the transactions,
either due to their nature or the way in which they are being
managed by the transactions.
=====================
P H I L I P P I N E S
=====================
ABS-CBN CORP: Expects to Lose Up to PHP35MM Daily When Off Air
--------------------------------------------------------------
Vann Marlo M. Villegas at BusinessWorld Online reports that ABS-CBN
Corp. stands to suffer millions of pesos in foregone advertising
revenues daily, impair its credit standing, and risks defaulting on
debts after it was forced to stop broadcasting with the issuance of
a cease-and-desist order (CDO) by the National Telecommunications
Commission (NTC), the Lopez-led media network said.
In its 46-page petition for temporary restraining order
and/preliminary injunction, the listed company said it was losing
PHP30-PHP35 million every day it was off air.
"While its most immediate loss would be loss of advertising
revenues, ABS-CBN risks incurring a lot more," it said. "Because of
the CDO, ABS-CBN will not be able to service its debts and this
would constrain its creditors to require collateral from its
loans."
According to BusinessWorld, the network noted that it had received
a notice from a bank demanding that it come up with a loan
collateral, and that its credit lines and letters of credit "had
already been adversely affected," hindering activities that it
funded.
"Even if the total potential financial impact of the foregoing may
be estimated, the injury is still irreparable because ABS-CBN
cannot recover its losses from the NTC," it said.
ABS-CBN told the stock exchange it has PHP16 billion in short-term
liabilities due this year and PHP26.5 billion in long-term
liabilities, BusinessWorld discloses.
BusinessWorld notes that the NTC on May 5 issued the order against
ABS-CBN, immediately directing it to stop broadcast operations in
radio and television. ABS-CBN turned directly to the Supreme Court
(SC) on May 7 and filed the petition, the report relates.
BusinessWorld relates that the CDO is contrary to the guidance
provided by the Department of Justice in a Senate hearing that the
Congress may authorize the NTC to issue provisional authority for
ABS-CBN to operate while it awaits approval of its franchise
renewal application.
The House of Representatives sent a letter and the Senate issued a
resolution asking the NTC to issue the provisional authority.
ABS-CBN also noted that the injury extends to the public as its
shutdown would result in loss of livelihood for its more than
11,000 employees and their families, the report says.
It also claimed that with the closure, the public is deprived of a
source of news and entertainment in the time of the pandemic and
lockdown "just when it is most needed to disseminate information,"
according to BusinessWorld.
The network also said that it had raised more than PHP237 million
to support the fight against the coronavirus disease 2019, and that
it plans to do more but the shutdown order limited its capacity to
do so, adds BusinessWorld.
ABS-CBN Corporation operates a network of TV & radio stations in
the Philippines. The Company produces entertainment and news
programs for basic and cable channels. The Company has interests in
film and music production and distribution as well as online and
mobile services and magazine publishing. Content is broadcasted
through TFC Channel via cable, sattelite and internet.
HALIFAX HOTEL: Marco Polo Davao to Close Doors by June 15
---------------------------------------------------------
BusinessWorld Online reports that Marco Polo Davao, one of the
first international hotel brands to operate in the city, will cease
operations by June 15 with severance pay already distributed to
most of its employees.
BusinessWorld relates that Francis R. Ledesma, president of hotel
owner Halifax Hotel Davao Inc., said the decision to close is a
matter of putting their workers' welfare as priority given actual
and projected losses due to restrictions relating to the
coronavirus disease 2019 (COVID-19) outbreak.
"We chose to first take care of our people . . . You cannot beat a
pandemic," he said in a phone interview on May 8, BusinessWorld
relays.
Retirement packages were given to those of retirable age, and
separation benefits for the others, BusinessWorld relays.
According to the report, Mr. Ledesma said there are no ongoing
discussions about reopening because "we will not know what will
happen next."
But when reopening plans arise, he said laid-off employees will get
priority for hiring.
BusinessWorld says the 245-room hotel, with a five-star
classification based on the Department of Tourism rating system,
still has a few foreign guests who have been stranded in the city
and some business process outsourcing (BPO) employees.
Mr. Ledesma said the BPO clients are expected to leave as soon as
the quarantine protocols, which are in effect until May 15, are
eased, BusinessWorld relays.
"Living in a hotel (for BPO employees) is a big expense to the
company," the report quotes Mr. Ledesma as saying.
Apart from the quarantine rules, the Davao City government has also
declared a ban until end-2020 on all big events such as conventions
and festivals, according to BusinessWorld.
BusinessWorld adds that Regina Rosa D. Tecson, chief of the City
Tourism Operations Office, said they have yet to make an assessment
of COVID-19's impact on the local tourism industry as their "office
has transitioned into several other functions as of the moment" in
line with the COVID-19 response.
Ms. Tecson did said they have already received reports of other
tourism establishments, including smaller accommodation facilities,
having closed or downsized.
=================
S I N G A P O R E
=================
SINGTEL: Appoints Provisional Liquidator to Video Streaming Unit
----------------------------------------------------------------
The Business Times reports that Singtel on May 8 said the
bankruptcy division of the Supreme Court of Mauritius has granted a
petition to appoint Anjeev Hurry, c/o Level 9, Orange Tower,
Cybercity Ebene, Mauritius, as the provisional liquidator of HOOQ
Digital Mauritius (HOOQ M).
Singtel has an indirect 76.5 per cent interest in HOOQ M - its
video streaming service subsidiary, BT discloses.
In a previous announcement, Singtel said it had presented a
petition to the bankruptcy division of Mauritius' Supreme Court to
wind up HOOQ M and to appoint a provisional liquidator.
The winding-up of HOOQ M is not expected to have any material
impact on the net tangible assets or earnings per share of Singtel,
said Singtel at the time, BT relays.
Singapore Telecommunications Limited provides communication,
infotainment, and technology services to consumers and small
businesses in Singapore, Australia, the United States, Europe, and
internationally.
ZENROCK COMMODITIES: Involved in Dishonest Deals, HSBC Says
-----------------------------------------------------------
Bloomberg News reports that HSBC Holdings Plc alleged Singapore oil
trader ZenRock Commodities Trading Pte Ltd. was involved in a
series of "highly dishonest transactions" that included the company
using the same cargo of oil to obtain more than one loan from
banks, according to court documents seen by Bloomberg.
Bloomberg says Europe's biggest lender filed an application to
Singapore's High Court on May 4 to put ZenRock under so-called
judicial management, a form of debt restructuring in which a third
party runs the company. The bank said it has lost confidence in the
management of the company and its ability to pay its debts to the
bank, which amount to almost $49 million, according to the
documents seen by Bloomberg.
According to Bloomberg, HSBC said it cannot discuss matters under
legal proceedings. Nobody from Singapore-based ZenRock responded to
multiple attempts to seek comment via calls and messages.
Bloomberg relates that HSBC said it has reason to believe that
ZenRock provided false and/or fraudulent transaction documents in
its loan applications to the bank. It also said it believes the
trader may have wrongfully diverted payment of funds that should
have been paid directly to the lender "and/or dissipated these
funds beyond the reach of the bank."
HSBC said it understands that the company's total debt to
institutional lenders stands at about $165 million, according to
the documents.
In response to market speculation over its financial status,
ZenRock released a statement last month saying it's not under
statutory restructuring or insolvency protection, Bloomberg
recalls. The Singapore-based company is operational and is working
with other creditor banks to negotiate a consensual restructuring,
a person said on May 6, Bloomberg relays.
Singapore-based ZenRock Commodities trades crude, oil products and
petrochemicals. ZenRock has offices in Singapore, Shanghai and
Geneva. The company was founded in Singapore in 2014 by a group of
veteran oil traders, including Xie Chun, formerly from Unipec, and
Tony Lin, formerly Vitol SA's China head.
ZENROCK COMMODITIES: Placed Under Judicial Management
-----------------------------------------------------
Reuters reports that Zenrock Commodities Trading Pte Ltd has been
placed under the management of a court-appointed supervisor
following an application by HSBC Holdings, the bank told Reuters on
May 8.
Zenrock did not immediately respond to a Reuters request for
comment.
"The Singapore High Court granted HSBC's application for the
appointment of interim judicial managers (IJM) in relation to
Zenrock," Reuters quotes a spokeswoman from HSBC as saying in an
emailed response to a query.
Reuters relates that two sources with knowledge of the matter said
executives from accounting firm KPMG have been appointed as IJMs of
Zenrock.
Under so-called judicial management, a court appoints independent
managers to run the affairs of a financially distressed company in
place of existing management. Such moves are often seen favourably
by creditors, Reuters notes.
Singapore-based ZenRock Commodities trades crude, oil products and
petrochemicals. ZenRock has offices in Singapore, Shanghai and
Geneva. The company was founded in Singapore in 2014 by a group of
veteran oil traders, including Xie Chun, formerly from Unipec, and
Tony Lin, formerly Vitol SA's China head.
*********
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.
Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2020. All rights reserved. ISSN: 1520-9482.
This material is copyrighted and any commercial use, resale or
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