/raid1/www/Hosts/bankrupt/TCRAP_Public/211227.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, December 27, 2021, Vol. 24, No. 252
Headlines
A U S T R A L I A
CRIMSON BOND 2021-1P: S&P Assigns B (sf) Rating on Cl. F Notes
DISABILITY SERVICES: Ashurst Advises Scope on Acquisition of DSA
NORTH NOWRA: First Creditors' Meeting Set for Jan. 6
SURRY HILLS: First Creditors' Meeting Set for Jan. 6
C H I N A
CHINA AIRCRAFT: Fitch Rates USD100MM Unsec. Notes Final 'BB+'
CHINA EVERGRANDE: Says Risk Team Will Engage With Creditors
LAI FUNG HOLDINGS: Fitch Rates Proposed USD2 Billion MTN 'B+'
WISDOM EDUCATION: Fitch Lowers LT IDR to 'B-', On Watch Negative
XINHU ZHONGBAO: Fitch Affirms 'B-' LT FC IDR, Outlook Stable
I N D I A
ALCHEMIST LIMITED: Insolvency Resolution Process Case Summary
BESTO TRADELINK: CRISIL Withdraws D Rating on INR20cr Loans
CHITIZ DAIRY: CRISIL Moves B Debt Ratings to Not Cooperating
DSK SOUTHERN PROJECTS: Insolvency Resolution Process Case Summary
GOLHAR GINNING: CRISIL Keeps D Debt Ratings in Not Cooperating
GOVIND REALTY: Insolvency Resolution Process Case Summary
INFAR TIE-UP: Insolvency Resolution Process Case Summary
KASTURI RAM: CRISIL Keeps D Debt Rating in Not Cooperating
MANGALSIDDHI MULTIPURPOSE: CRISIL Keeps Rating in Not Cooperating
MEDINNBELLE HERBALCARE: Insolvency Resolution Process Case Summary
MILLENNIUM SOFT-TECH: Insolvency Resolution Process Case Summary
MINI HOTELS: ICRA Keeps D Debt Rating in Not Cooperating
NOUVA PROTEINS: Insolvency Resolution Process Case Summary
PUSHPAK BULLIONS: ICRA Keeps D Debt Ratings in Not Cooperating
RAJ VEHICLES: CRISIL Moves B Debt Ratings to Not Cooperating
RAMAKRISHNA BLUE: CRISIL Keeps B+ Debt Rating in Not Cooperating
ROHAN METALS: CRISIL Moves B Debt Ratings to Not Cooperating
SHANKAR RICE: CRISIL Keeps B Debt Rating in Not Cooperating
UM GREEN LIGHTING: Insolvency Resolution Process Case Summary
UNIFOUR DEVELOPERS: CRISIL Moves B+ Rating to Not Cooperating
P H I L I P P I N E S
PHILIPPINE AIRLINES: Reorganization Plan Wins U.S. Court Approval
S I N G A P O R E
TRANS EQUATORIAL: Placed in Provisional Liquidation
S R I L A N K A
BANK OF CEYLON: Fitch Lowers ForeignCurrency IDR to 'CC'
SRI LANKA: Fitch Lowers LT ForeignCurrency IDR to 'CC'
SRILANKAN AIRLINES: Fitch Lowers USD175MM Unsec. Bonds to 'CC'
- - - - -
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A U S T R A L I A
=================
CRIMSON BOND 2021-1P: S&P Assigns B (sf) Rating on Cl. F Notes
--------------------------------------------------------------
S&P Global Ratings assigned its ratings to seven classes of
residential mortgage-backed securities (RMBS) issued by Perpetual
Corporate Trust Ltd. as trustee for Crimson Bond Trust 2021-1P.
Crimson Bond Trust 2021-1P is a securitization of prime residential
mortgage loans originated by BC Securities Pty Ltd. (BCS).
The ratings reflect that the credit risk of the underlying
collateral portfolio, which predominantly comprises residential
mortgage loans to nonresidents of Australia, and the credit support
provided to each class of notes are commensurate with the ratings
assigned. Credit support is provided by subordination, excess
spread, if any, and a loss reserve funded by the trapping of excess
spread, subject to conditions. Our assessment of credit risk takes
into account BCS's underwriting standards and approval process, and
its servicing quality.
The rated notes can meet timely payment of interest and ultimate
payment of principal under the rating stresses. Key rating factors
are the level of subordination provided, the loss reserve, the
principal draw function, the liquidity reserve, and the provision
of an extraordinary expense reserve. S&P said, "Our analysis is on
the basis that the notes are fully redeemed via the principal
waterfall mechanism under the transaction documents by their legal
final maturity date, and we assume the notes are not called at or
beyond the call-option date."
S&P said, "Our ratings also take into account the counterparty
exposure to Australia and New Zealand Banking Group Ltd. (ANZ) as
the bank account provider.
"We also have factored into our ratings the legal structure of the
trust, which is established as a special-purpose entity and meets
our criteria for insolvency remoteness.
"We have assessed the servicing and standby servicing arrangements
in this transaction under our "Global Framework For Assessing
Operational Risk In Structured Finance Transactions" criteria,
published on Oct. 9, 2014, and concluded that there are no
constraints on the maximum rating that can be assigned to the
notes."
Ratings Assigned
Crimson Bond Trust 2021-1P
Class A1-MM, A$80.00 million: AAA (sf)
Class A1-AU, A$53.40 million: AAA (sf)
Class B, A$36.50 million: AA (sf)
Class C, A$43.60 million: A (sf)
Class D, A$39.70 million: BBB (sf)
Class E, A$27.00 million: BB (sf)
Class F, A$17.90 million: B (sf)
Class G, A$13.90 million: Not rated
DISABILITY SERVICES: Ashurst Advises Scope on Acquisition of DSA
----------------------------------------------------------------
Mirage News reports that Ashurst has advised Scope on the
acquisition of Disability Services Australia Limited and its
subsidiaries, DSA Mentoring Services Limited (DSA Mentoring) and
Macquarie Employment Training Service Limited (METS).
According to the report, Ashurst was appointed by Scope to advise
in relation to the acquisition of DSA, METS and DSA Mentoring,
which entered into voluntary administration earlier this year.
Scope was chosen as the preferred bidder and the parties executed a
Commitment Agreement on Nov. 17, 2021, with the Deed of Company
Arrangement being executed on Dec. 2. The transaction completed on
Dec. 13, 2021. This is a novel Creditors’ Scheme of Arrangement
as it relates to the acquisition of companies limited by guarantee,
the report notes.
“We are delighted to have assisted Scope in bringing Disability
Services Australia into the Scope Group. Scope and Disability
Services Australia are two of Australia most respected registered
NDIS disability services providers. Disability Services Australia
supports over 1500 participants in NSW and employs more than 1700
people across NSW,” the report quotes lead partner on the matter,
Kylie Lane (Corporate Transactions), as saying.
Ms. Lane was assisted by lawyers John Saunders, Maxine Viertmann
and Julia Mollica, graduate Lucinda Merrett (Corporate
Transactions), partner Ross McClymont, lawyers Daniel Dai,
Panagiota Houpis (RSSG), partner Lucinda Hill, lawyer Amelia
Barrow, graduate Quynh Nguyen (Dispute Resolution), partners Jon
Lovell and Jennie Mansfield, senior associate Ffion Whaley,
graduate Siobhan Parker; partners Ian Kellock and Costa Koutsis,
counsel Bronwyn Kirkwood, graduate Hayley Young (Tax), partner
Vicki Aron, senior associate Joy Yi (Real Estate), and partner
Kellech Smith and lawyer Elizabeth Arms (IP).
Gayle Dickerson, James Dampney and Peter Gothard of KPMG were
appointed as administrators of Disability Services on Aug. 25,
2021.
NORTH NOWRA: First Creditors' Meeting Set for Jan. 6
----------------------------------------------------
A first meeting of the creditors in the proceedings of North Nowra
Pub Trading Pty Ltd, trading as The North Nowra Tavern, will be
held on Jan. 6, 2022, at 11:00 a.m. via teleconference only.
Sule Arnautovic and John Vouris of Hall Chadwick were appointed as
administrators of North Nowra on Dec. 23, 2021.
SURRY HILLS: First Creditors' Meeting Set for Jan. 6
----------------------------------------------------
A first meeting of the creditors in the proceedings of Surry Hills
Pub Pty Ltd, trading as The Crown Hotel, will be held on Jan. 6,
2022, at 11:00 a.m. via teleconference only.
Sule Arnautovic and John Vouris of Hall Chadwick were appointed as
administrators of Surry Hills on Dec. 23, 2021.
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C H I N A
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CHINA AIRCRAFT: Fitch Rates USD100MM Unsec. Notes Final 'BB+'
-------------------------------------------------------------
Fitch Ratings has assigned a final rating of 'BB+' to China
Aircraft Leasing Group Holdings Limited (CALC, BB+/Stable) USD100
million senior unsecured note issued under CALC Bonds Limited's
USD3 billion medium-term note (MTN) programme, which is rated
'BB+'. The issued notes carry a coupon rate of 4.85% and are due on
23 December 2024.
CALC Bonds Limited is CALC's wholly owned offshore SPV registered
in the British Virgin Islands. The notes are listed on the Hong
Kong Exchange, and the proceeds will be used for aircraft
acquisitions, business expansion in aircraft and related business,
refinancing existing borrowings, and general corporate purposes.
The final rating is in line with the expected rating assigned on 15
December 2021 and follows the receipt of documents conforming to
information previously received.
KEY RATING DRIVERS
The rating on the senior unsecured notes issued under the MTN
programme by CALC Bonds Limited is in line with CALC's Long-Term
Issuer Default Rating (IDR), as the notes are unconditionally and
irrevocably guaranteed by CALC, and will at all times rank at least
equally with all other present and future unsecured and
unsubordinated obligations of CALC and CALC Bonds Limited.
CALC's IDR is based on a two-notch uplift from its standalone
credit profile of 'BB-', reflecting Fitch's expectation of modest
support from state-owned China Everbright Group (CEG) and the
affiliated entities within the group, including China Everbright
Bank Company Limited (BBB/Stable).
Fitch believes CALC has a limited degree of strategic importance to
CEG due to limited shareholding control, a lack of common branding
and complexities associated with legal commitments to CALC spanning
across CEG and China Everbright Limited (CEL, BBB/Stable).
This is somewhat offset by the strong linkage between CEG and CALC,
the importance of CALC's operations to CEG's 'Four-Three-Three'
development strategy, which includes the objective of cultivating a
world-leading aircraft lessor, and CEG's strong operational and
managerial control over CALC, with a record of providing ordinary
funding and liquidity support to CALC.
Fitch's assessment of CALC's standalone credit profile reflects a
smaller scale, higher leverage, and greater lessee and geographic
concentration relative to higher-rated peers, as well as
significant financing and refinancing needs related to a large
order book and substantial debt maturities in the next two to three
years. This is mitigated by the company's quality fleet and limited
exposure to troubled airlines, adequate liquidity as well as
resilient air traffic in China. CALC's leverage - measured by
debt/tangible equity - is high, ranging between 9.0x and 10.0x from
2017 to 2020. Factoring in the upcoming bond, Fitch expects 1H21
reported leverage of 9.0x may increase slightly, but it should
remain below 9.5x.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- The rating on the senior unsecured notes issued under CALC
Bonds Limited's MTN programme is directly linked to CALC's
rating. The ratings could be downgraded if there is a
worsening of the structural subordination that causes the
recovery on the senior unsecured debt to decline. This could
arise from a high level of encumbered assets or a change in
the mix of funding between onshore and offshore entities.
-- CALC's rating would be downgraded if Fitch assesses a
weakening in its standalone credit profile. This could arise
from a deterioration in asset performance; heightened risk
appetite for growth beyond Fitch's expectations; leverage in
excess of 10x for a sustained period; unsecured funding
falling below 50%; or reduced liquidity relative to debt
maturities and order book commitments.
-- CALC's rating is sensitive to its linkage with CEG and Fitch's
assessment of CEG's credit profile. A weakening in the linkage
between CEG and CALC, such as a dilution in ownership or
control; a reduction in CALC's strategic role to CEG; or
reduced liquidity support from CEG and its affiliates would
lead to a downgrade.
-- CALC's IDR is also sensitive to materially adverse
developments with respect to the coronavirus pandemic,
particularly if they have an outsized impact on China, CEG,
CEL or CALC.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- The rating on the notes is equalised with that of CALC's IDR.
A rating upgrade is unlikely without similar rating action on
CALC's IDR. CALC's IDR could be upgraded if Fitch's assessment
of CALC's standalone credit profile improves. This could arise
from leverage falling to below 5.0x on a sustained basis
without deterioration in asset quality and profitability,
coupled with strengthened funding and liquidity relative to
its financing needs.
-- Strengthened linkages between CALC and CEG could be positive
for the rating. This could arise from more explicit legal ties
between CALC and CEG, or a meaningful increase in CEG's
shareholding and control through board representation in CALC.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means 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.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond 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 four 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.
CHINA EVERGRANDE: Says Risk Team Will Engage With Creditors
-----------------------------------------------------------
The Wall Street Journal reports that debt-laden China Evergrande
Group said that the committee helping steer its massive
restructuring is deploying extensive resources to help contain
risks and will engage with creditors.
The Journal relates that the reassurance echoes a pledge earlier
this month to work with holders of offshore debt and follows a
sustained selloff in the company’s stock and bonds, with
Evergrande shares recently hitting a series of record lows.
"In view of the risks the group is currently facing, the risk
management committee of China Evergrande Group is utilizing its
extensive resources and will actively engage with the group’s
creditors," the company said in a filing to the Hong Kong exchange
on Dec. 22, the Journal relays. The committee will do so to
"mitigate the group’s risk and protect the legitimate interest of
the parties," it said.
Evergrande said Dec. 6 that it has set up the committee, whose
members include representatives from several state-owned
enterprises, the Journal recalls. They include Guangdong Holdings
Ltd., an investment-holding company controlled by the provincial
government, and China Cinda Asset Management Co., one of the
country’s largest managers of distressed assets, the report
notes.
About China Evergrande
China Evergrande Group is an integrated residential property
developer. The Company, through its subsidiaries, operates in
property development, investment, management, finance, internet,
health, culture, and tourism markets.
As reported in the Troubled Company Reporter-Asia Pacific on Dec.
13, 2021, Fitch Ratings has downgraded to 'RD' (Restricted
Default), from 'C', the Long-Term Foreign-Currency Issuer Default
Ratings (IDR) of Chinese homebuilder China Evergrande Group and its
subsidiaries, Hengda Real Estate Group Co., Ltd and Tianji Holding
Limited. Fitch has affirmed the senior unsecured ratings of
Evergrande and Tianji at 'C', with a Recovery Rating of 'RR6', as
well as the Tianji-guaranteed senior unsecured notes issued by
Scenery Journey Limited at 'C', with a Recovery Rating of 'RR6'.
The downgrades reflect the non-payment of coupons due Nov. 6, 2021
for Tianji's USD645 million 13% bonds and USD590 million 13.75%
bonds after the grace period lapsed on 6 December. The non-payment
is consistent with an 'RD' rating, signifying the uncured expiry of
any applicable grace period, cure period or default forbearance
period following a payment default on a material financial
obligation.
LAI FUNG HOLDINGS: Fitch Rates Proposed USD2 Billion MTN 'B+'
-------------------------------------------------------------
Fitch Ratings has assigned a 'B+' rating with a Recovery Rating of
'RR4' to Chinese real-estate firm Lai Fung Holdings Limited's
(B+/Negative) proposed USD2 billion medium-term note (MTN)
programme. The programme will be issued by its wholly owned
subsidiary, Lai Fung MTN Limited, and will be irrevocably and
unconditionally guaranteed by Lai Fung Holdings Limited. The
proceeds from any issuance under the programme will be used for
refinancing and other general corporate purposes.
Lai Fung's ratings take into consideration Fitch's view that its
investment property (IP) EBITDA interest cover will trend towards
1.0x within the forecast period (FY21: 0.6x). The Negative Outlook
reflects the potential for negative rating action should there be
signs that the ramp-up of visitation at Hengqin Novotown, and the
resultant improvement in the group's IP, hotel and theme-park
revenues, do not materialise as Fitch expects.
KEY RATING DRIVERS
Uncertainty on Recovery of Interest Coverage: Lai Fung's rental
income from IPs increased to HKD682 million in FY21 (from HKD641
million in FY20), but its rental EBITDA from IPs decreased to
HKD285 million from HKD379m due to higher operating costs for its
IPs, in particular, Hengqin Novotown. The recovery of interest
cover will depend on progress with Hengqin Novotown and the rental
contribution from newly completed commercial buildings in Shanghai
and Guangzhou, which are subject to uncertainties.
New IPs Underway: Lai Fung is on track to add 1.3 million sq ft of
rental gross floor area in the next two years, representing about
30% of its existing rental portfolio. This includes Shanghai
Northgate Plaza, likely to be completed in the second quarter of
2022, and Guangzhou Haizhu Plaza projects in the first half of
2023. Fitch expects these properties to contribute significant
rental income in FY24.
Stable Cash Flows From Mature IPs: Fitch expects the performance of
the mature IP portfolio in Shanghai and Guangzhou to remain largely
stable. Total rental revenue (excluding Novotown) was CNY681
million in FY21 (FY20: CNY675 million). Lai Fung also had HKD3.5
billion of completed properties held for sale, net of contract
liabilities and deposits received, as of FYE21, which could provide
additional cash flow from the sales proceeds.
No Rating Impact from Parent: Fitch rates Lai Fung based on the
Standalone Credit Profile, as Fitch assesses the linkage between
Lai Fung and its parent, Lai Sun Development Company Limited (LSD),
as weak. Both are listed companies, and Lai Fung's operations and
financial functions (despite some management overlap) are
independent from the parent. Lai Fung focuses on IP and
developments in mainland China, while LSD operates in other
regions. Fitch views the parent's consolidated financial profile as
similar to Lai Fung's financial profile.
DERIVATION SUMMARY
Fitch expects Lai Fung's IP EBITDA interest coverage to trend
towards 1.0x in the forecast period, as Hengqin Novotown ramps up
and new office buildings in Shanghai and Guangzhou begin to
contribute to IP revenue. Lai Fung's credit profile is also
supported by the stable rental income generated from its
high-quality mature IP portfolio, which consists mainly of offices
and shopping malls in Shanghai and Guangzhou.
Fitch believes Lai Fung's higher-quality IP assets and its record
of stronger funding access support the two-notch difference in
ratings with China Logistics Property Holdings Co., Ltd
(B-/Stable), which has similar asset scale (IP value of around
USD2.5 billion) and IP EBITDA interest coverage (2020: 0.8x).
KEY ASSUMPTIONS
-- IP rental revenue of around HKD700 million-900 million a year
in FY22-FY24 (FY21: HKD682 million);
-- IP EBITDA of around HKD350 million-550 million a year in FY22-
FY24 (FY21: HKD295 million);
-- Annual capex of HKD0.5 billion-1.0 billion for FY22-FY24
(FY21: HKD0.8 billion).
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- The Outlook would be revised to Stable if the IP EBITDA/gross
interest coverage trends towards 1.0x by FY22.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- IP EBITDA/gross interest coverage fails to trend towards 1.0x
by FY22;
-- Continuous weakness in hotel and theme park EBITDA;
-- Weakening of LSD's consolidated financial profile.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
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 four 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.
LIQUIDITY AND DEBT STRUCTURE
Lai Fung had available cash of HKD2.8 billion and restricted cash
of HKD1.9 billion at FYE21, sufficient to cover short-term
borrowings of HKD470 million and put option liabilities of HKD1.3
billion. The company also has USD350 million of bonds maturing in
January 2023.
ISSUER PROFILE
Lai Fung's core businesses include the investment and development
of serviced apartments, residential, office and commercial
properties and development and operation of - and investment in -
cultural, leisure, entertainment and related facilities in China.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means 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.
WISDOM EDUCATION: Fitch Lowers LT IDR to 'B-', On Watch Negative
----------------------------------------------------------------
Fitch Ratings has downgraded Wisdom Education International
Holdings Company Limited's Long-Term Issuer Default Rating (IDR) to
'B-', from 'BB-' and has placed the rating on Rating Watch
Negative. This follows Wisdom's announcement on 19 December 2021
that it has deconsolidated its K-12 schools for the financial year
ended August 2021 (FY21) in light of China's Implementation Rules
of the Law for Promoting Private Education.
The rules, which came into effect on 1 September 2021, ban social
organisations and individuals from conducting related-party
transactions with schools that provide compulsory education or from
controlling such schools via contractual agreements.
The downgrade is based on the company's significantly diminished
scale and highly fragmented and volatile nature of its remaining
ancillary education services business, while the Rating Watch
Negative reflects further potential weakening of the company's
business profile, depending on its strategy for its remaining
businesses. The rating, however, incorporates limited debt and a
cash balance for the remaining consolidated business, which
indicates reasonable financial liquidity in the short term.
KEY RATING DRIVERS
Regulations Disrupt Business Model: Fitch believes the
Implementation Rules will impair the cash flow access of offshore
listed K-12 private school operators that had utilised a variable
interest entity structure. Local governments are in the process of
implementing the rules, although progress may vary by province.
Wisdom has chosen to cease executing contractual arrangements with
affected schools and wholly foreign owned enterprises to be fully
compliant with the rules and has deconsolidated all of its K-12
school operations due to the loss of control.
This will result in a loss of cash flow access from onshore
schools; its K-12 operations accounted for 90% of revenue and 88%
of EBIT in FY21.
Diminished Scale: The scale of Wisdom's remaining businesses has
been severely diminished following the deconsolidation of its
private school operations. Fitch estimates EBIT from the remaining
businesses at CNY84 million in FY21, against CNY689 million from
the consolidated business, excluding one-off losses associated with
the deconsolidation. Restrictions on related-party transactions
from the Implementation Rules could prevent Wisdom from gaining
additional cash flow from its deconsolidated operations.
Weaker Business Profile: Wisdom's business profile has weakened due
to lower cash flow visibility. Private school operators had
benefited from recurring and highly visible revenue and cash flow
from tuition fees, but Fitch believes the remaining ancillary
education services will have lower switching costs and barriers to
entry. Wisdom's remaining business is mainly services based and
includes the provision of extra-curricular activities and the
operation of school buses for students at its schools.
High Execution Risk: Wisdom plans to shift its business model to
provide educational services to students in affected schools and
other unrelated schools. However, Fitch sees significant execution
risk due to the competitive nature of the services industry and an
undifferentiated service offering. Wisdom's ability to compete and
expand beyond its affiliated schools is uncertain, as the company
lacks an advantage over other service providers that may be more
specialised and have longer operating records.
Adequate Near-Term Liquidity: Fitch believes that Wisdom has
sufficient liquidity to meet its short-term obligations. Wisdom had
available cash on hand of CNY402 million, pledged deposits of CNY83
million and investments in financial products of CNY73 million as
of August 2021, based on its preliminary results and following the
deconsolidation. This was sufficient to cover its short-term
borrowings of CNY174 million. The majority of its debt was taken
out by individual schools under the variable interest entity
structure and was secured by the rights to receive tuition and
boarding fees.
ESG - Management Strategy: Fitch has revised Wisdom's ESG Relevant
Score for Management Strategy to '4', from '3', as Fitch believes
management strategy will affect Wisdom's rating in combination with
other factors, but will not be a key rating driver.
The company has not addressed the impact from the Implementation
Rules with a detailed business reorganisation plan, while other
offshore listed K-12 school operators have been taking action to
reduce the financial impact, including disposing of affected
schools to a charitable organisation or transferring students from
affected schools to high schools with separate licences.
DERIVATION SUMMARY
Wisdom is more affected by the Implementation Rules than Bright
Scholar Education Holdings Limited (BB-/Rating Watch Negative), as
it is less diversified by school location and educational format.
Wisdom derives all of its revenue from primary and secondary
schools, while Bright Scholar has complementary education services
and overseas schools that are not affected by the new rules. Bright
Scholar also has a plan to limit regulatory impact by disposing of
affected schools while continuing to provide management services to
them. This will result in Wisdom having a much smaller scale than
Bright Scholar.
The Rating Watch Negative on Bright Scholar reflects heightened
regulatory risk and a potential change in its business model once
it completes the disposal of its compulsory education schools and
not-for-profit kindergartens.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- Fitch will resolve the Rating Watch Negative and reassess the
rating once full audited financial statements are released and
a detailed business reorganisation plan is announced.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Audited financial statement showing a material difference
compared with preliminary results that indicates a
substantially weaker operating and financial position, such as
deteriorating liquidity.
-- Failure to publish a detailed and credible business
reorganisation plan that complies with the Implementation
Rules.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
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 four 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.
LIQUIDITY AND DEBT STRUCTURE
Adequate Near-Term Liquidity: Wisdom had available cash on hand of
CNY402 million, pledged deposits of CNY83 million and investments
in financial products of CNY73 million as of end-August 2021. This
was sufficient to cover its short-term borrowings of CNY174
million.
ISSUER PROFILE
Wisdom was previously one of the largest private education groups
operating primary and secondary schools in China, but the company
is shifting its focus to providing educational services.
ESG CONSIDERATIONS
Wisdom has an ESG Relevance Score of '4' for Management Strategy as
it has not delivered a detailed business reorganisation plan in
light of the Implementation Rules. This has a negative impact on
the credit profile, and is relevant to the rating in conjunction
with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means 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.
XINHU ZHONGBAO: Fitch Affirms 'B-' LT FC IDR, Outlook Stable
------------------------------------------------------------
Fitch Ratings has affirmed Xinhu Zhongbao Co., Ltd.'s Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'B-' with a Stable
Outlook. Fitch has withdrawn Xinhu Zhongbao's senior unsecured
rating. Fitch has removed all the ratings from Under Criteria
Observation (UCO), following the publication of its updated
Corporate Rating Criteria.
The Stable Outlook reflects Fitch's view that the company has
manageable refinancing risk after its recent debt issuances, while
the ratings are constrained by its high leverage and tight
liquidity.
Fitch has withdrawn Xinhu Zhongbao's senior unsecured rating
because it has redeemed its USD60.1 million bonds due 20 December
2021 and there is no Fitch-rated debt outstanding.
KEY RATING DRIVERS
Tight but Manageable Liquidity: At end September 2021, Xinhu
Zhongbao reported total cash of CNY13.8 billion, against short-term
debt of CNY17.7 billion. The short-term maturities included about
CNY9 billion of bank loans and about CNY5 billion of capital-market
debt. Fitch believes the company is able to refinance its bank
loans in view of its high-quality land bank, while it will repay
its capital-market debt with cash on hand.
Xinhu Zhongbao issued USD500 million of senior notes in September
and October 2021, which can be used to refinance its offshore
capital-market debt due in 1H22. The company has repurchased some
of its offshore bonds due in March and June 2022, and repaid its
offshore bonds due in December 2021. It also repaid its onshore
bonds due in October, November and December 2021.
High Leverage: Fitch expects Xinhu Zhongbao's leverage, defined by
net debt/net property assets, to be at 65%-70% for 2021-2022, which
is above that of similarly rated peers. Fitch continues to take a
60% haircut to Xinhu Zhongbao's listed equity investments, mainly
in Greentown China, Hangzhou Honghua Digital Technology Ltd,
Xiangcai Securities Co., Ltd., Shengjing Bank, and China CITIC Bank
Corporation Limited (BBB/Stable). The value of these investments
has been adjusted to reflect recent market volatility that has
affected their prices.
Sufficient Quality Land Bank: Xinhu Zhongbao's land bank life is
about five years, which is substantially longer than the around 2.5
years of peers in the 'B' rating category. The company can
deleverage by cutting land acquisitions without impairing its
business profile. Its land bank quality is high despite its
concentration in the Yangtze River Delta, as reflected in its
strong EBITDA margin.
Stable Attributable Sales: Fitch expects Xinhu Zhongbao's total
contracted sales at around CNY30 billion a year in 2021-2022, and
the attributable contracted sales at CNY15 billion-18 billion a
year. Fitch believes its sales are likely to remain stable in 2022
given the high sell-through rate of its Shanghai redevelopment
projects. Its attributable contracted sales scale is similar to
that of 'B' rated peers.
Parent and Subsidiary Linkage: Zhejiang Xinhu Group has a 40.18%
equity stake in Xinhu Zhongbao. There have been intragroup asset
transfers and common control of subsidiaries - Xiangcai Securities
Co., Ltd. and Xinhu Holding Co., Ltd. There is also management
overlap between the two entities and Xinhu Zhongbao provides some
financial guarantees to the parent. Fitch assesses the standalone
credit profile of Zhejiang Xinhu Group as the same as that of Xinhu
Zhongbao, despite Zhejiang Xinhu Group's higher leverage than Xinhu
Zhongbao.
DERIVATION SUMMARY
Xinhu Zhongbao's ratings are constrained by its high leverage of
65%-70% and limited financial flexibility with cash/short-term debt
ratio of below 1x.
Xinhu Zhongbao's refinancing risks are lower than for Guorui
Properties Limited (B-/Negative, Under Criteria Observation)
because Xinhu Zhongbao has refinanced its US-dollar bonds due in
December 2021 and 1H22 with new issuances in September and October
2021. Fitch also assesses Xinhu Zhongbao's business profile as
stronger due to its larger contracted sales and higher margin,
while its leverage is higher than Guorui's 50%-55%.
Skyfame Realty (Holdings) Limited's (B-/Negative) available cash to
short-term debt ratio of 0.4x is lower than that of Xinhu Zhongbao.
Skyfame also had weaker attributable sales of CNY6 billion in 2020
than Xinhu Zhongbao, while its leverage of 50%-60% is lower than
Xinhu Zhongbao's.
China South City Holdings Limited (CSC, B-/Negative) has higher
refinancing risk than XInhu Zhongbao as it has more capital market
debt maturities in 1H22. CSC also has a weaker business profile
with attributable sales of about CNY10 billion per year.
KEY ASSUMPTIONS
-- New land acquisitions of about CNY0.6 billion in 2021, CNY2
billion per year in 2022-2023 (2020: CNY0.9 billion);
-- Total contracted sales at of CNY28 billion-32 billion per year
in 2021-2023 (2020: CNY25.8 billion);
-- Development gross profit margin at around 28%-30% in 2021-2023
(2020: 40%).
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- Net debt/net development-property assets sustained below 60%
(1H21:68%);
-- Available cash/short-term debt sustained above 1.0x (1H21:
0.7x);
-- Annual attributable contracted sales sustained above CNY25
billion (2021 forecast: CNY 17 billion).
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Deterioration in liquidity or refinancing prospects;
-- Significant decline in attributable contracted sales.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
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 four 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.
LIQUIDITY AND DEBT STRUCTURE
Tight but Manageable Liquidity: Xinhu Zhongbao's total cash of
CNY13.8 billion at end-September 2021 was less than its short-term
debt of CNY17.7 billion, which includes about CNY9 billion of bank
loans and about CNY5 billion of capital-market debt.
The company issued USD500 million of senior notes in September and
October 2021, which can be used to refinance its offshore
capital-market debt maturing in 1H22. The company redeemed its
offshore US-dollar bonds due in December 2021 and repaid onshore
bonds due in October and November 2021.
ISSUER PROFILE
Xinhu Zhongbao has been listed on the Shanghai Stock Exchange since
1999. It focusses on property development in the Yangtze River
Delta, with a few redevelopment projects in the Shanghai Inner Ring
Road. It also has substantial non-property equity investments.
SUMMARY OF FINANCIAL ADJUSTMENTS
Fitch's calculation of net property assets used in the leverage
calculation includes: inventory, investment properties, property,
plant and equipment (land and buildings),
development-property-related receivables, investments in property
JVs, net amounts due from property JVs, presales deposits, less
contract deposits and trade payables. Fitch includes the amount of
external guarantees in net debt and net property assets
calculation, and gives 40% cash credit to its listed equity
investments based on market value.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means 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.
=========
I N D I A
=========
ALCHEMIST LIMITED: Insolvency Resolution Process Case Summary
-------------------------------------------------------------
Debtor: Alchemist Limited
Registered office:
23, Nehru Place
New Delhi 110019
Principal office:
SCO No. 12-13
Sector 9-D
Madhya Marg
Chandigarh 160009
Insolvency Commencement Date: November 30, 2021
Court: National Company Law Tribunal, New Delhi Bench
Estimated date of closure of
insolvency resolution process: June 5, 2022
(180 days from commencement)
Insolvency professional: Mr. Chandra Prakash
Interim Resolution
Professional: Mr. Chandra Prakash
812, 8th Floor
Indra Prakash Building
Barakhamba Road
New Delhi 110001
E-mail: cppumba2409@gmail.com
ip.alchemistltd@gmail.com
Last date for
submission of claims: December 21, 2021
BESTO TRADELINK: CRISIL Withdraws D Rating on INR20cr Loans
-----------------------------------------------------------
CRISIL Ratings has withdrawn its rating on the bank facilities of
Besto Tradelink Limited (BTPL) on the request of the company and
after receiving no objection certificate from the bank. The rating
action is in-line with CRISIL Rating's policy on withdrawal of its
rating on bank loan facilities.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 6 CRISIL D (ISSUER NOT
COOPERATING; Rating Withdrawn)
Packing Credit 3 CRISIL D (ISSUER NOT
COOPERATING; Rating Withdrawn)
Proposed Long Term 11 CRISIL D (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Withdrawn)
CRISIL Ratings has been consistently following up with BTPL for
obtaining information through letters and emails dated October 24,
2020 and April 20, 2021 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of BTPL. This restricts CRISIL
Ratings' ability to take a forward looking view on the credit
quality of the entity. CRISIL Ratings believes that rating action
on BTPL is consistent with 'Assessing Information Adequacy Risk'.
CRISIL Ratings has Continues the ratings on the bank facilities of
BTPL to 'CRISIL D/CRISIL D Issuer not cooperating'.
Incorporated in 1997, BTPL trades in commodities, including
agro-commodities (primarily rice), metals, cotton, and fabrics. The
company is based in Ahmedabad (Gujarat) and is promoted by Mr.
Rakesh Patel and his family.
CHITIZ DAIRY: CRISIL Moves B Debt Ratings to Not Cooperating
------------------------------------------------------------
CRISIL Ratings has migrated the rating on bank facilities of Chitiz
Dairy and Agro Foods Private Limited (CDAFPL) to 'CRISIL B/Stable
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 1.3 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Term Loan 6.7 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
CRISIL Ratings has been consistently following up with CDAFPL for
obtaining information through letters and emails dated December 8,
2021 and December 13, 2021 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of CDAFPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on
CDAFPL is consistent with 'Assessing Information Adequacy Risk'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL Ratings has migrated the rating on
bank facilities of CDAFPL to 'CRISIL B/Stable Issuer not
cooperating'.
Incorporated in 2015 and promoted by Mr. Nirad Baran Mondal and Mr.
Birendra Krishna Bajaj, CDAFPL produces milk and allied products at
its facility in Bankura, West Bengal. The company has capacity to
process 1,00,000 litre of milk per day.
DSK SOUTHERN PROJECTS: Insolvency Resolution Process Case Summary
-----------------------------------------------------------------
Debtor: DSK Southern Projects Private Limited
1187/60, DSK House
J.M. Road Shivajinagar
Pune 411005, Maharashtra
India
Insolvency Commencement Date: December 9, 2021
Court: National Company Law Tribunal, Mumbai Bench
Estimated date of closure of
insolvency resolution process: June 7, 2022
Insolvency professional: Manoj Kumar Agarwal
Interim Resolution
Professional: Manoj Kumar Agarwal
B-83, Andheri Green Field Tower CHS Ltd
Jogeshwari Vikhroli Link Road
Near Poonam Nagar
Andheri East, Mumbai
Maharashtra 400093
E-mail: ipmanoj.agarwal@gmail.com
- and -
C/o A.P. Singhi & Co.
Office No. 40, Sanas Plaza
Bajirao Road, Shukrawar Peth
Near Durga Car Decor
Pune 411002
E-mail: ip.dsksouthern@gmail.com
Classes of creditors: Home Buyers
Insolvency
Professionals
Representative of
Creditors in a class: Mr. Rajendra R. Agrawal
Mr. Ritesh Raghunath Mahajan
Mr. Vivek Murlidhar Dabhade
Last date for
submission of claims: December 30, 2021
GOLHAR GINNING: CRISIL Keeps D Debt Ratings in Not Cooperating
--------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Golhar
Ginning & Oils Private Limited (GGOP) continue to be 'CRISIL D
Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 4.75 CRISIL D (Issuer Not
Cooperating)
Long Term Loan 2.50 CRISIL D (Issuer Not
Cooperating)
Long Term Loan 1.60 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with GGOP for
obtaining information through letters and emails dated September
15, 2021 and November 12, 2021 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of GGOP, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on GGOP
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
GGOP continues to be 'CRISIL D Issuer Not Cooperating'.
GGOPL was incorporated in November 2012, by Mr. Dhanraj Golhar
along with his brother Mr. Damodar Golhar. The company is engaged
in ginning of raw cotton (kapas); it began commercial production
from Nov 2014. The company has its manufacturing unit at
Hinganghat, Maharashtra.
GOVIND REALTY: Insolvency Resolution Process Case Summary
---------------------------------------------------------
Debtor: Shri Govind Realty Private Limited
Aashima Mall
Hosangabad Main Road
Bhopal, MP 462026
IN
Insolvency Commencement Date: December 16, 2021
Court: National Company Law Tribunal, Indore Bench
Estimated date of closure of
insolvency resolution process: January 14, 2022
(180 days from commencement)
Insolvency professional: Ms. Teena Saraswat Pandey
Interim Resolution
Professional: Ms. Teena Saraswat Pandey
387F 114 Scheme Part 1
Behind Diksha Boys
Hostel Sant Nagar
Indore, Madhya Pradesh 452010
E-mail: teenasaraswat@yahoo.co.in
ip.govindrealty@gmail.com
Last date for
submission of claims: December 29, 2021
INFAR TIE-UP: Insolvency Resolution Process Case Summary
--------------------------------------------------------
Debtor: Infar Tie-Up Private Limited
34/1Q, Ballygunge Circular Road
Kolkata, West Bengal 700019
India
Insolvency Commencement Date: December 14, 2021
Court: National Company Law Tribunal, Kolkata Bench
Estimated date of closure of
insolvency resolution process: June 12, 2022
Insolvency professional: Mr. Binay Kumar Singhania
Interim Resolution
Professional: Mr. Binay Kumar Singhania
BKS & Co, Diamond Heritage
16 Strand Road
Unit-519, 5th Floor
Kolkata, West Bengal 700001
E-mail: binay1@yahoo.com
- and -
AAA Insolvency Professionals LLP
Mousumi Co. Op. Housing Society
15B, Ballygunge Circular Road
Kolkata 700019
E-mail: infar@aaainsolvency.com
Last date for
submission of claims: December 28, 2021
KASTURI RAM: CRISIL Keeps D Debt Rating in Not Cooperating
----------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of Kasturi Ram
Science and Technological Park Limited (KRSTP) continues to be
'CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Term Loan 7.5 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with KRSTP for
obtaining information through letters and emails dated September
15, 2021 and November 12, 2021 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of KRSTP, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on KRSTP
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
KRSTP continues to be 'CRISIL D Issuer Not Cooperating'.
KRSTP, incorporated in 1997, is promoted by the Aggarwal family of
New Delhi. The company is engaging in farming. It is constructing a
warehouse to facilitate storage of agricultural products in
Sonepat, Haryana.
MANGALSIDDHI MULTIPURPOSE: CRISIL Keeps Rating in Not Cooperating
-----------------------------------------------------------------
CRISIL Ratings said the the ratings on bank facilities of
Mangalsiddhi Multipurpose Multistate Sah. Sangh Limited (MMMSSL)
continue to be 'CRISIL D Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 7 CRISIL D (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with MMMSSL for
obtaining information through letters and emails dated September
15, 2021 and November 12, 2021 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of MMMSSL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on
MMMSSL is consistent with 'Assessing Information Adequacy Risk'.
Based on the last available information, the ratings on bank
facilities of MMMSSL continues to be 'CRISIL D Issuer Not
Cooperating'.
MMMSSL is co-operative society promoted by Mr. Rajendra Tambile.
Established in 2010, the society processes and distributes milk
(pasteurised, homogenised, and standardised) to larger corporates
for sale under their brands. The society has a milk handling
capacity of around 1 lakh litres per day at Indapur in Pune,
Maharashtra. The society also processes milk and milk products such
as ghee, lassi, and curd under its Rajmangal brand.
MEDINNBELLE HERBALCARE: Insolvency Resolution Process Case Summary
------------------------------------------------------------------
Debtor: Meddinbelle Herbalcare Private Limited
Registered office:
Plot No. 13 Road No. 35 F/F
West Punjabi Bagh
New Delhi, Delhi 110026
Also at:
126, HPSIDC, Industrial Area
Baddi, Distt. Solan
Himachal Pradesh 173205
Insolvency Commencement Date: December 14, 2021
Court: National Company Law Tribunal, Bench-IV, New Delhi
Estimated date of closure of
insolvency resolution process: June 12, 2022
(180 days from commencement)
Insolvency professional: Santanu Kumar Samanta
Interim Resolution
Professional: Santanu Kumar Samanta
C-170, Golf View Apartments
Saket, New Delhi 110017
E-mail: santanukumar@yahoo.com
- and -
Immaculate Resolution Professionals
Private Limited
Unit No. 111, First Floor, Tower-A
Spazedge Commercial Complex
Sector-47, Sohna Road
Gurgaon 122018
E-mail: cirp.mhpl@gmail.com
Last date for
submission of claims: December 31, 2021
MILLENNIUM SOFT-TECH: Insolvency Resolution Process Case Summary
----------------------------------------------------------------
Debtor: Millenium Soft-Tech (India) Pvt LTd
2nd Floor, No. G-19
II Main Road
Industrial Estate
Ambattur
Chennai 600058
Insolvency Commencement Date: December 17, 2021
Court: National Company Law Tribunal, Chennai Bench
Estimated date of closure of
insolvency resolution process: June 14, 2022
(180 days from commencement)
Insolvency professional: S. Poosaidurai
Interim Resolution
Professional: S. Poosaidurai
C/o M.K. Dandeker and Co.
2nd Floor, No. 185 Old No. 100
Poonamallee High Road
Kilpauk, Chennai
Tamil Nadu 600010
E-mail: poosaidurai@gmail.com
poosaidurai@mkdandeker.com
Last date for
submission of claims: December 31, 2021
MINI HOTELS: ICRA Keeps D Debt Rating in Not Cooperating
--------------------------------------------------------
ICRA has retained the ratings for the bank facilities of Mini
Hotels & Projects in the ‘Issuer Not Cooperating’ category. The
rating is denoted as “[ICRA] D/[ICRA] D; ISSUER NOT
COOPERATING”.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Unallocated 6.50 [ICRA]D/[ICRA]D; ISSUER NOT
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.
The rating action has been taken in accordance with ICRA’s policy
in respect of non-cooperation by a rated entity available at
www.icra.in.
Mini Hotels and Projects (MHP), is a partnership firm, promoted by
Mr. P. Ravi Kumar and Ms. P. Padma on June 30, 2014. The firm has
renovated a multi storied building into a Hotel and branded as
“Hotel Aira”. The hotel is situated in Benz circle, Vijayawada,
a prime location that annually draws tourists and corporate
visitors from all over the country. The land and super structure is
owned by the partners and the super structure is being leased out
to MHP. The hotel comprises of 7 Standard rooms, 29 Executive
rooms, 4 Royal Suite, a Banquet Hall (accommodating 110 people) and
conference room. The hotel also has 80 seat fine dining restaurant
and 25 seat coffee shop. The hotel has commenced commercial
operations in the month of August 2016.
NOUVA PROTEINS: Insolvency Resolution Process Case Summary
----------------------------------------------------------
Debtor: Nouva Proteins Private Limited
Village Bajidpur
Kunjpura, Karnal
HR 132001
Insolvency Commencement Date: October 6, 2021
Court: National Company Law Tribunal, Chandigarh Bench
Estimated date of closure of
insolvency resolution process: April 5, 2022
(180 days from commencement)
Insolvency professional: Tarsem Chand Garg
Interim Resolution
Professional: Tarsem Chand Garg
Tarsem Garg and Company
SCO 56-57, Second Floor
Swastik Vihar
MDC, Sector-5
Panchkula 134114
Haryana
E-mail: gargtarsem@gmail.com
mtminsolvencyprofessionals@
gmail.com
Mobile: +91 95010 36694
Last date for
submission of claims: October 22, 2021
PUSHPAK BULLIONS: ICRA Keeps D Debt Ratings in Not Cooperating
--------------------------------------------------------------
ICRA has retained the ratings for the bank facilities of Pushpak
Bullions Pvt. Ltd. in the ‘Issuer Not Cooperating’ category.
The rating is denoted as “[ICRA]D; ISSUER NOT COOPERATING”.
Amount
Facilities (INR crore) Ratings
---------- ----------- -------
Long Term- 140.00 [ICRA] D; ISSUER NOT
Fund Based- COOPERATING; Rating Continues
Cash Credit to remain under issuer not
cooperating category
Long Term- 10.00 [ICRA] D; ISSUER NOT
Unallocated 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.
The rating action has been taken in accordance with ICRA’s policy
in respect of non-cooperation by a rated entity available at
www.icra.in.
Incorporated on December 17, 1999 and promoted by Mr. Chandrakant
Patel, Pushpak trades in gold and silver bullion. The company is
also involved in manufacturing and wholesale trading and export of
plain gold jewellery, diamond studded jewellery, gold and silver
coins, medallions, bullion bars and precious stones.
RAJ VEHICLES: CRISIL Moves B Debt Ratings to Not Cooperating
------------------------------------------------------------
CRISIL Ratings has migrated the rating on bank facilities of Raj
Vehicles Private Limited (RVPL) to 'CRISIL B/Stable/CRISIL A4
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 14 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Cash Term Loan 4.91 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Overdraft 5.09 CRISIL A4 (ISSUER NOT
Facility COOPERATING; Rating Migrated)
Proposed Short Term 1 CRISIL A4 (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL Ratings has been consistently following up with RVPL for
obtaining information through letters and emails dated October 16,
2021 and November 24, 2021 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of RVPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on RVPL
is consistent with 'Assessing Information Adequacy Risk'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL Ratings has migrated the rating on
bank facilities of RVPL to 'CRISIL B/Stable/CRISIL A4 Issuer not
cooperating'.
Incorporated in 2007, RVPL is promoted by Mr. Rajvinder Singh and
his family members. It is an authorised dealer for M&M's entire
range of passenger vehicles, utility vehicles and two-wheelers in
Patiala, Sangrur, and Barnala. It operates four showrooms in the
sales, service, and spares format: two in Patiala and one each in
Barnala and Sangrur.
RAMAKRISHNA BLUE: CRISIL Keeps B+ Debt Rating in Not Cooperating
----------------------------------------------------------------
CRISIL Ratings said the ratings on bank facilities of Sri
Ramakrishna Blue Metals (SRBM) continue to be 'CRISIL
B+/Stable/CRISIL A4 Issuer Not Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term 10 CRISIL B+/Stable (Issuer Not
Bank Loan Facility Cooperating)
Proposed Short Term 1 CRISIL A4 (Issuer Not
Bank Loan Facility Cooperating)
CRISIL Ratings has been consistently following up with SRBM for
obtaining information through letters and emails dated September
15, 2021 and November 12, 2021 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SRBM, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SRBM
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
SRBM continues to be 'CRISIL B+/Stable/CRISIL A4 Issuer Not
Cooperating'.
SRBM was set up in 2016 and is owned and managed by Mr. S K
Yoganathan and Mr. Y Sudhankrishna. This Perundurai (Erode, Tamil
Nadu)-based firm produces manufacturing M-Sand and blue metals used
in the construction and infrastructure industries.
ROHAN METALS: CRISIL Moves B Debt Ratings to Not Cooperating
------------------------------------------------------------
CRISIL Ratings has migrated the rating on bank facilities of Rohan
Metals Private Limited (RMPL) to 'CRISIL B/Stable Issuer not
cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 14 CRISIL B/Stable (ISSUER NOT
COOPERATING; Rating Migrated)
Proposed Long Term 1 CRISIL B/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating Migrated)
CRISIL Ratings has been consistently following up with RMPL for
obtaining information through letters and emails dated October 16,
2021 and November 24, 2021 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of RMPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on RMPL
is consistent with 'Assessing Information Adequacy Risk'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL Ratings has migrated the rating on
bank facilities of RMPL to 'CRISIL B/Stable Issuer not
cooperating'.
RMPL, incorporated in 1996, manufactures and trades in lead alloys
and ingots that are used in batteries. Its production unit is in
Bhiwadi, Rajasthan, and trading unit in New Delhi. Mr. Sunil Soni
and his wife, Ms Vandana Soni, are the promoters.
SHANKAR RICE: CRISIL Keeps B Debt Rating in Not Cooperating
-----------------------------------------------------------
CRISIL Ratings said the rating on bank facilities of Shankar Rice
Mill (SRM) continues to be 'CRISIL B/Stable Issuer Not
Cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Cash Credit 9.5 CRISIL B/Stable (Issuer Not
Cooperating)
CRISIL Ratings has been consistently following up with SRM for
obtaining information through letters and emails dated September
15, 2021 and November 12, 2021 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of SRM, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on SRM
is consistent with 'Assessing Information Adequacy Risk'. Based on
the last available information, the ratings on bank facilities of
SRM continues to be 'CRISIL B/Stable Issuer Not Cooperating'.
SRM was set up as a partnership firm of Mr. Ashok Kumar, Mr.
Shishan Kumar, Mr. Mohit Kumar, and Mr. Mangal Sain in 2008. The
firm mills, processes and sells basmati rice in the domestic
market. The manufacturing unit is at Nigdhu, Karnal (Haryana).
UM GREEN LIGHTING: Insolvency Resolution Process Case Summary
-------------------------------------------------------------
Debtor: UM Green Lighting Private Limited
Registered office:
806, Devika Tower
6, Nehru Place
New Delhi 110019
Corporate office:
UM House, Plot No. 35P
Sector-44, Gurgaon 122002
Haryana
Insolvency Commencement Date: December 13, 2021
Court: National Company Law Tribunal, Court 2, New Delhi Bench
Estimated date of closure of
insolvency resolution process: June 11, 2022
Insolvency professional: Amar Gopal Gambhir
Interim Resolution
Professional: Amar Gopal Gambhir
21/16, 2nd Floor
West Patel Nagar
New Delhi 110008
E-mail: aggandassociates@gmail.com
irpumgreen@gmail.com
Last date for
submission of claims: December 27, 2021
UNIFOUR DEVELOPERS: CRISIL Moves B+ Rating to Not Cooperating
-------------------------------------------------------------
CRISIL Ratings has migrated the rating on bank facilities of
Unifour Developers Private Limited (UDPL) to 'CRISIL B+/Stable
Issuer not cooperating'.
Amount
Facilities (INR Crore) Ratings
---------- ----------- -------
Proposed Long Term 3.5 CRISIL B+/Stable (ISSUER NOT
Bank Loan Facility COOPERATING; Rating
Migrated)
Term Loan 6.0 CRISIL B+/Stable (ISSUER NOT
COOPERATING; Rating
Migrated)
CRISIL Ratings has been consistently following up with UDPL for
obtaining information through letters and emails dated December 8,
2021 and December 13, 2021 among others, apart from telephonic
communication. However, the issuer has remained non cooperative.
'The investors, lenders and all other market participants should
exercise due caution with reference to the rating assigned/reviewed
with the suffix 'ISSUER NOT COOPERATING' as the rating is arrived
at without any management interaction and is based on best
available or limited or dated information on the company. Such non
co-operation by a rated entity may be a result of deterioration in
its credit risk profile. These ratings with 'ISSUER NOT
COOPERATING' suffix lack a forward looking component.'
Detailed Rationale
Despite repeated attempts to engage with the management, CRISIL
Ratings failed to receive any information on either the financial
performance or strategic intent of UDPL, which restricts CRISIL
Ratings' ability to take a forward looking view on the entity's
credit quality. CRISIL Ratings believes that rating action on UDPL
is consistent with 'Assessing Information Adequacy Risk'.
Therefore, on account of inadequate information and lack of
management cooperation, CRISIL Ratings has migrated the rating on
bank facilities of UDPL to 'CRISIL B+/Stable Issuer not
cooperating'.
Incorporated in 2012, UDPL is constructing a residential building,
Aamantran, at Morabadi in Ranchi. The company is a part of the
Ranchi-based Unifour group. Mr. Suraj Singh Pratap, Mr. Sunil Kumar
Singh, Mr. Gangesh Singh, and their family members are the
promoters.
=====================
P H I L I P P I N E S
=====================
PHILIPPINE AIRLINES: Reorganization Plan Wins U.S. Court Approval
-----------------------------------------------------------------
Bloomberg News reports that Philippine Airlines Inc. won court
approval for its reorganisation plan, paving the way for the
carrier to exit bankruptcy, cut $2 billion in debt and revive its
fortunes after a slump in international travel due to the pandemic.
Bloomberg relates that bankruptcy Judge Shelley Chapman in
Manhattan said on Dec. 24 that she would approve the chapter 11
plan after unsecured creditors voted to back the proposal. The
reorganization didn’t face any major opposition from debt
holders.
"This case is a model for what can be accomplished in chapter 11,"
Bloomberg quotes Judge Chapman as saying. "You’ve achieved
overwhelming consensus."
The company will try implement the plan and exit bankruptcy by the
end of the year, if it is able to get approval from securities
regulators in the Philippines, a lawyer for the airline said during
the court hearing on Dec. 24, according to Bloomberg.
Bloomberg notes that the flagship carrier, majority owned by
billionaire Lucio Tan, is one of several to enter debt
restructuring in the U.S., which companies often consider a
preferred location. Aeromexico and Colombia’s Avianca Holdings
sought court protection in New York last year.
Bloomberg says Philippine Airlines already got a green light to
access $505 million worth of equity and debt financing to help it
meet its obligations. As part of the turnaround, it plans to reduce
the size of its fleet.
About Philippine Airlines Inc.
Philippine Airlines, Inc., is the flag carrier of the Philippines
and the country's only full-service network airline. PAL was the
first commercial airline in Asia and marked its 80th anniversary in
March 2021. PAL's young fleet of Boeing 777s, Airbus A350s, Airbus
A330s, Airbus A321s and De Havilland DHC Q400 aircraft operate out
of hubs in Manila, Cebu and Davao to 29 destinations in the
Philippines and 32 destinations in Asia, North America, Australia,
Europe and the Middle East. PAL was rated a 4-Star Global Airline
by Skytrax in 2018 and a 5-Star Major Airline by the Association of
Airline Passengers (APEX) in 2020, and was likewise voted the
World's Most Improved Airline in the 2019 Skytrax worldwide
passenger survey with a ranking of 30th best airline in the world.
On Sept. 3, 2021, Philippine Airlines, Inc. (PAL) filed a voluntary
petition for relief under Chapter 11 of the U.S. Bankruptcy Code
(Bankr. S.D.N.Y. Case No. 21-11569) to seek approval of a
restructuring plan negotiated with lenders and lessors.
As of July 31, 2021, the Debtor's overall assets and liabilities
were approximately $4.1 billion and $6.07 billion, respectively.
The Honorable Shelley C. Chapman is the case judge.
The Debtor tapped Debevoise & Plimpton LLP as general bankruptcy
counsel; Norton Rose Fulbright as special counsel; and Seabury
Securities LLC and Seabury International Corporate Finance LLC as
restructuring advisor and investment banker. Angara Abello
Concepcion Regala & Cruz (ACCRA) is acting as legal advisor in the
Philippines. Kurtzman Carson Consultants, LLC, is the claims and
noticing agent.
Buona Sorte Holdings, Inc. and PAL Holdings Inc., as DIP lenders,
are represented by White & Case LLP.
=================
S I N G A P O R E
=================
TRANS EQUATORIAL: Placed in Provisional Liquidation
---------------------------------------------------
Ms. Oon Su Sun and Mr. Lin Yueh Hung of RSM Singapore were
appointed as joint and several Provisional Liquidators of Trans
Equatorial Engineering Pte Ltd on Dec. 16, 2021.
The Provisional Liquidators can be reached at:
Ms. Oon Su Sun
Mr. Lin Yueh Hung
c/o 8 Wilkie Road
#03-08 Wilkie Edge
Singapore 228095
=================
S R I L A N K A
=================
BANK OF CEYLON: Fitch Lowers ForeignCurrency IDR to 'CC'
--------------------------------------------------------
Fitch Ratings has downgraded Bank of Ceylon's (BOC) Long-Term
Foreign-Currency Issuer Default Rating (IDR) to 'CC', from 'CCC'.
The rating does not carry an Outlook because of the high volatility
at this rating level, in line with Fitch's rating definitions.
Fitch has also downgraded BOC's Viability Rating (VR) to 'cc', from
'ccc', and has affirmed the Long-Term Local-Currency IDR at 'CCC'.
BOC's National Long-Term Rating of 'AA-(lka)' was not considered in
this review.
In line with the updated Bank Rating Criteria, Fitch has assigned a
Government Support Rating (GSR) of 'No Support' to BOC and
withdrawn the Support Rating and Support Rating Floor, as they are
no longer relevant to Fitch's coverage following the publication of
Fitch's updated Bank Rating Criteria on 12 November 2021.
KEY RATING DRIVERS
IDRs and VIABILITY RATING
The rating actions follow Fitch's downgrade of Sri Lanka's
Long-Term Foreign-Currency IDR to 'CC' from 'CCC' and the
affirmation of the sovereign's Long-Term Local-Currency IDR at
'CCC' on 17 December 2021. See Fitch Downgrades Sri Lanka's
Long-Term Foreign-Currency IDR to 'CC'.
The downgrade of BOC's Long-Term Foreign-Currency IDR is driven by
the downgrade of its VR. The downgrade of the VR reflects the risks
to the bank's standalone creditworthiness, especially from its
foreign-currency funding and liquidity position.
The VR is below the implied score of 'ccc+', as Fitch believes
BOC's funding and liquidity profile, which Fitch scores at
'cc'/negative, has a greater influence on the VR than the weighting
would suggest. This reflects Fitch's view of heightened risks to
the stability of BOC's foreign-currency funding and liquidity
stemming from the deterioration in the sovereign's foreign-currency
credit profile.
Heightened foreign-currency funding and liquidity risks could be
reflected in more challenging access to and the rising cost of
foreign-currency funding. Fitch believes there is a greater
possibility of restrictions being imposed on BOC's ability to
service its foreign-currency obligations in the event of a
sovereign default, which drives the negative outlook on the factor
score. Funding dollarisation remained moderate in 9M21 and mostly
stemmed from foreign-currency deposits, which stood at 23% of total
deposits.
Fitch maintains the operating environment (OE) score at
'ccc'/negative, as the downgrade of the sovereign's Long-Term
Foreign-Currency IDR has not significantly weakened Fitch's view of
the OE. The score already incorporates Sri Lanka's weak economic
environment and sovereign profile, which may limit the bank's
operating flexibility. The negative outlook on the OE score
reflects the significant near-to-medium term downside risk
presented by the weakening sovereign credit profile, as spill-over
effects could impact economic performance. Fitch expects the
economy to expand in 2022, albeit at a slower pace of 2.0%, from an
estimated 3.6% in 2021.
Fitch has reassessed BOC's business profile score to 'b-'/negative,
from 'b+'/stable, given the weak OE and the potential impact on the
bank's ability to generate and defend business volume. The score is
above the VR and OE score, as it takes into account BOC's dominant
domestic market position as Sri Lanka's largest bank, accounting
for around 20% of sector assets. The negative outlook captures
potential pressure on BOC's business profile stemming from the OE
and, ultimately, the sovereign.
Fitch maintained BOC's risk profile at 'ccc'/negative, as Fitch
believes the score already factors in BOC's enlarged exposure to
the sovereign and broader public sector through increased loan book
exposure to the state and state-owned entities. Fitch's assessment
also captures BOC's investments in government securities,
particularly those denominated in foreign currency, at 6.7% of
assets at end-2020. The negative outlook reflects downside risk to
the risk profile from the OE and weak sovereign.
Fitch maintained BOC's asset quality score at 'ccc'/negative, which
already incorporates the weak OE and the bank's risk appetite.
BOC's impaired-loan ratio of 9.8%, based on stage 3 loans as of
9M21 (2020: 10.3%), continued to benefit from strong loan growth
and regulatory forbearance. The negative outlook reflects Fitch's
view of downside risk to the asset-quality score from non-loan
exposure in the form of government-issued foreign-currency
securities.
Fitch maintained BOC's earnings and profitability score at
'b-'/negative, which captures elevated risk through increased
earnings volatility amid the challenging OE, although Fitch does
not envisage BOC becoming structurally unprofitable for a sustained
period. Operating profit/risk-weighted assets recovered to 3.8% in
9M21, after dropping to 2.0% in 2020 following a sharp rise in loan
impairment charges. The negative outlook on the score is due to the
downside risk from potential economic fallout of any restructuring
of the foreign -currency sovereign debt that might occur.
Fitch downgraded BOC's capitalisation and leverage score to
'ccc'/negative, from 'b-'/negative, as Fitch believes BOC may
require a capital injection should sovereign stress intensify and
it has to absorb a haircut on its foreign-currency government
securities exposure. This is in conjunction with the heightened
constraints on accessing capital, given the sovereign's weak
ability to provide support should BOC's capital need to be
replenished. The negative outlook reflects downside risk to
capitalisation and leverage in a scenario of increased sovereign
stress.
Fitch affirmed BOC's Long-Term Local-Currency IDR as it takes into
consideration that the risk of local-currency restrictions being
imposed is lower than that of foreign-currency restrictions should
the sovereign move towards default. It reflects Fitch's view of the
sovereign's current and likely continued access to local-currency
funding, and the treatment is consistent with Fitch's criteria
under certain circumstances when the VR and the sovereign rating
are both at very low levels. The bank has so far maintained access
to local-currency liquidity, including through the Central Bank of
Sri Lanka, indicating a lesser likelihood of default on
local-currency obligations.
GOVERNMENT SUPPORT RATING
The GSR reflects Fitch's assessment that there is no reasonable
assumption of government support being forthcoming. Fitch believes
the sovereign's ability to provide extraordinary support is
severely constrained, as reflected in the sovereign rating,
sovereign financial flexibility and the size of the banking sector
relative to the economy, despite a high propensity for the
sovereign to extend support to the bank due to its high systemic
importance and full state ownership.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
IDRs and VIABILITY RATING
-- BOC's IDR would most likely be downgraded upon further
pressure on the sovereign rating stemming from a default
event. This could lead to foreign-currency restrictions being
imposed, hindering BOC's ability to service its foreign
currency obligations, or a significant erosion of its capital
buffers in the event of sizeable haircuts on sovereign debt.
GOVERNMENT SUPPORT RATING
-- The rating is already at its lowest level and thus has no
downside risk.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
IDR and VIABILITY RATING
-- BOC's ratings are constrained by the sovereign rating. Fitch
does not anticipate developments that might lead to positive
rating action in the near term, unless downward pressure on
the sovereign rating abates.
GOVERNMENT SUPPORT RATING
-- The GSR is constrained by the sovereign rating. An upward
revision is possible, provided the sovereign's ability to
provide support significantly improves. However, Fitch does
not expect this in the near to medium term.
VR ADJUSTMENTS
The assigned VR is below the implied VR, reflecting a negative
adjustment from the weakest link of BOC's funding and liquidity,
which has a greater impact on the VR than what the weighting
suggests.
BOC has a 1.78% equity stake in Fitch Ratings Lanka Ltd. No
shareholder other than Fitch, Inc. is involved in the day-to-day
rating operations of, or credit reviews undertaken by, Fitch
Ratings Lanka Ltd.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and
Covered Bond 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 four 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.
ESG CONSIDERATIONS
BOC has an ESG Relevance Score of '4' for Governance Structure due
to ownership concentration, with a 100% state shareholding and
several related-party transactions with the state and state-owned
entities. This has a negative impact on the credit profile, and is
relevant to the ratings in conjunction with other factors.
Unless otherwise disclosed in this section, the highest level of
ESG credit relevance is a score of '3'. This means 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.
SRI LANKA: Fitch Lowers LT ForeignCurrency IDR to 'CC'
------------------------------------------------------
Fitch Ratings has downgraded Sri Lanka's Long-Term Foreign-Currency
Issuer Default Rating (IDR) to 'CC', from 'CCC'. Fitch typically
does not assign Outlooks or apply modifiers for sovereigns with a
rating of 'CCC' or below.
KEY RATING DRIVERS
The downgrade reflects Fitch's view of an increased probability of
a default event in coming months in light of Sri Lanka's worsening
external liquidity position, underscored by a drop in
foreign-exchange reserves set against high external debt payments
and limited financing inflows. The severity of financial stress is
illustrated by elevated government-bond yields and downward
pressure on the currency.
Fitch has affirmed the Long-Term Local-Currency IDR at 'CCC', as
authorities have continued access to domestic financing, despite
high and still-rising government debt and an elevated debt service
burden.
Sri Lanka's foreign-exchange reserves have declined much faster
than Fitch expected at its last review, owing to a combination of a
higher import bill and foreign-currency intervention by the Central
Bank of Sri Lanka. Foreign exchange reserves have declined by about
USD2 billion since August, falling to USD1.6 billion at
end-November, equivalent to less than one month of current external
payments (CXP). This represents a drop in foreign-currency reserves
of about USD 4 billion since end-2020.
Fitch believes it will be difficult for the government to meet its
external debt obligations in 2022 and 2023 in the absence of new
external financing sources. Obligations include two international
sovereign bonds of USD500 million due in January 2022 and USD1
billion due in July 2022. The government also faces
foreign-currency debt service payments, including principal and
interest, of USD6.9 billion in 2022, equivalent to nearly 430% of
official gross international reserves as of November 2021.
Cumulative foreign-currency debt service, including interest and
principal, amounts to about USD26 billion from 2022 through to
2026.
The timing and availability of external resources is unclear and
may not be readily available for debt service. The central bank
published a six-month roadmap in October that outlined plans to
raise additional external borrowings through a number of channels,
including bilateral and multilateral sources, syndicated loans and
through the monetisation of under-utilised assets in 1Q22.
A drawdown on the existing currency swap facility with the People's
Bank of China (PBOC) could boost reserves by up to CNY10 billion
(USD1.5 billion equivalent). However, even with resources from the
swap facility, foreign exchange reserves are likely to remain under
pressure, in Fitch's view. Additional sources of financing could
come from an economic support package from India, which contains a
swap facility under the South Asian Association for Regional
Cooperation currency framework of USD400 million, a swap facility
with the Qatar Central Bank, remittances securitisation and a
revolving credit facility with the Bank of China Limited
(A/Stable). However, even if all these sources are secured, Fitch
believes it will be challenging for the government to maintain
sufficient external liquidity to allow for uninterrupted debt
servicing in 2022.
Press reports suggest the government may be contemplating IMF
financing; an IMF programme would unlock multilateral financing,
but Fitch believes the Fund could well suggest restructuring to
bring about debt sustainability.
Sri Lanka's external finances are further challenged by a
persistent current account deficit, resulting in downward pressure
on the exchange rate. Fitch estimates that the deficit widened to
about 5.7% of GDP in 2021 and expect it to remain at about 4.0% in
2022, before falling to 2.1% by 2023. A plunge in remittances, a
weak tourism recovery and rising imports have contributed to the
wider current account deficit. Travel and tourism, an important
economic driver, has been hit hard by the COVID-19 pandemic and the
outlook for a recovery remains uncertain given the emergence of new
highly transmissible virus variants.
The Sri Lankan rupee/US dollar spot exchange rate depreciated by
7%-8% since end-2020, and the central bank intervened to support
the currency, exacerbating the decline in reserves.
Wide fiscal deficits continue to worsen the outlook for debt
sustainability. The 2021 fiscal deficit target of 8.9% of GDP was
missed by a wide margin, and Fitch expects the government deficit
to widen to about 11.5% of GDP in 2022. Fitch believes 2022 revenue
targets are optimistic, especially in light of Fitch's expectation
of weak economic activity. Fitch forecasts general government debt
to reach about 110% of GDP by 2022, and to keep rising under
Fitch's baseline, absent major fiscal consolidation.
Fitch also believes it is unlikely that Sri Lanka will meet its
2025 government debt reduction target of about 89% of GDP or narrow
the fiscal deficit to 4.8% of GDP. Rising interest payments are a
major driver of the widening deficit and the interest/revenue ratio
of at about 95.0% is well above the peer median of 11.3%.
Sri Lanka's economic performance is likely to weaken in 2022, as
the challenging external position and exchange-rate pressure will
have knock-on effects on economic activity. Foreign currency
shortages in 2021 hampered food and fuel imports, and continued
external liquidity stress could worsen supply shortages, hurting
economic activity. Fitch expects growth to slow to 2.0% in 2022,
from an estimated 3.6% in 2021, before recovering to 4.3% in 2023
partly due to base effects and a gradual easing of domestic
pressures, although downside risks to Fitch's forecasts remain. Sri
Lanka's economy was expanding at a modest pace prior to the
pandemic, which led real GDP to contract by 3.6% in 2020.
ESG - Governance: Sri Lanka has an ESG Relevance Score of '5' for
Political Stability and Rights. This reflects the high weight that
the World Bank Governance Indicators (WBGI) have in Fitch's
proprietary Sovereign Rating Model. Sri Lanka has a medium WBGI
ranking at the 47th percentile, reflecting a recent record of
peaceful political transitions and a moderate level of rights for
participation in the political process. As Sri Lanka has a
percentile rank below 50 for the governance indicator, this has a
negative impact on the credit profile.
ESG - Governance: Sri Lanka has an ESG Relevance Score of '5[+]'
for the Rule of Law, Institutional and Regulatory Quality and
Control of Corruption. This reflects the high weight that the WBGI
has in Fitch's proprietary Sovereign Rating Model. Sri Lanka has a
medium WBGI ranking at the 53rd percentile, reflecting moderate
institutional capacity, established rule of law and a moderate
level of corruption. As Sri Lanka has a percentile rank above 50
for the respective governance indicators, this has a positive
impact on the credit profile.
Sri Lanka has an ESG Relevance Score of '5' for Creditor Rights, as
willingness to service and repay debt is relevant to the rating and
is a rating driver for Sri Lanka, as for all sovereigns. Given the
increasing possibility of default reflected in the CC rating, this
has a negative impact on the credit profile.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Failure to service bonded debt obligations within grace
periods stipulated in relevant documentation, or unilateral
declaration of a debt moratorium;
-- Launch of a formal debt renegotiation process by authorities
or the start of a process that Fitch deems to constitute a
default or default-like event.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- External Finances: Improved external liquidity, supported by
higher non-debt inflows or lower external sovereign
refinancing risk from an enhanced liability profile that
allows for smooth servicing of liabilities.
-- Public Finances: Implementation of a credible medium-term
fiscal consolidation strategy that supports a sustained
decline in the general government debt/GDP ratio, increasing
financing options and reducing the probability of default.
-- Structural: Improved policy coherence and credibility, leading
to more sustainable public and external finances and a
reduction in the risk of debt distress.
SOVEREIGN RATING MODEL (SRM) AND QUALITATIVE OVERLAY (QO)
In accordance with its rating criteria, Fitch's has not utilised
the SRM or QO to explain the ratings in this instance. Ratings of
'CCC+' and below are instead guided by the rating definitions.
Fitch's SRM is the agency's proprietary multiple regression rating
model that employs 18 variables based on three-year centred
averages, including one year of forecasts, to produce a score
equivalent to a Long-Term Foreign-Currency IDR. Fitch's QO is a
forward-looking qualitative framework designed to allow for
adjustment to the SRM output to assign the final rating, reflecting
factors within Fitch's criteria that are not fully quantifiable
and/or not fully reflected in the SRM.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Sovereigns, Public Finance
and Infrastructure 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.
ESG CONSIDERATIONS
Sri Lanka has an ESG Relevance Score of '5' for Political Stability
and Rights as WBGIs have the highest weight in Fitch's SRM and are
therefore highly relevant to the rating and a key rating driver
with a high weight.
Sri Lanka has an ESG Relevance Score of '5[+]' for Rule of Law,
Institutional and Regulatory Quality and Control of Corruption as
WBGIs have the highest weight in Fitch's SRM and are therefore
highly relevant to the rating and are a key rating driver with a
high weight. As Sri Lanka has a percentile rank above 50 for the
respective Governance Indicators, this has a positive impact on the
credit profile.
Sri Lanka has an ESG Relevance Score of '4' for Human Rights and
Political Freedoms, as the Voice and Accountability pillar of the
WBGI is relevant to the rating and a rating driver. As Sri Lanka
has a percentile rank below 50 for the respective governance
indicator, this has a negative impact on the credit profile.
Sri Lanka has an ESG Relevance Score of '5' for Creditor Rights, as
willingness to service and repay debt is relevant to the rating and
is a rating driver for Sri Lanka, as for all sovereigns. Given the
increasing possibility of default reflected in the CC rating, this
has a negative impact on the credit profile. Except for the matters
discussed above, the highest level of ESG credit relevance, if
present, is a score of '3'. This means ESG issues are
credit-neutral or have only a minimal credit impact on the entity,
either due to their nature or to the way in which they are being
managed by the entity.
SRILANKAN AIRLINES: Fitch Lowers USD175MM Unsec. Bonds to 'CC'
--------------------------------------------------------------
Fitch Ratings has downgraded the rating on SriLankan Airlines
Limited's (SLA) USD175 million government-guaranteed 7% unsecured
bonds due 25 June 2024 to 'CC', from 'CCC'.
KEY RATING DRIVERS
The rating action follows the downgrade of Sri Lanka's Long-Term
Foreign-Currency Issuer Default Ratings to 'CC' from 'CCC'. For
details, see Fitch Downgrades Sri Lanka's Long-Term
Foreign-Currency IDR to 'CC', published 17 December 2021.
The national carrier's bonds are rated at the same level as its
parent, the state of Sri Lanka, due to the unconditional and
irrevocable guarantee provided by the state. Currently, the Sri
Lankan government holds 99.71% of SLA through direct and indirect
holdings.
DERIVATION SUMMARY
Fitch has rated SLA's US dollar bonds at the same level as the
sovereign due to the unconditional and irrevocable guarantee
provided by the government. The rating is not derived from the
issuer's Standalone Credit Profile and thus is not comparable with
that of industry peers.
RATING SENSITIVITIES
Factor that could, individually or collectively, lead to positive
rating action/upgrade:
-- An upgrade of the sovereign rating.
Factor that could, individually or collectively, lead to negative
rating action/downgrade:
-- A downgrade of the sovereign rating.
Factors that could, individually or collectively, lead to positive
rating action/upgrade:
-- External Finances: Improved external liquidity, supported by
higher non-debt inflows or lower external sovereign
refinancing risk from an enhanced liability profile that
allows for smooth servicing of liabilities;
-- Public Finances: Implementation of a credible medium-term
fiscal consolidation strategy that supports a sustained
decline in the general government debt/GDP ratio, increasing
financing options and reducing the probability of default;
-- Structural: Improved policy coherence and credibility, leading
to more sustainable public and external finances and a
reduction in the risk of debt distress.
Factors that could, individually or collectively, lead to negative
rating action/downgrade:
-- Failure to service bonded debt obligations within grace
periods stipulated in relevant documentation, or unilateral
declaration of a debt moratorium;
-- Launch of a formal debt renegotiation process by authorities
or the start of a process that Fitch deems to constitute a
default or default-like event.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate
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 four 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.
ISSUER PROFILE
SriLankan Airlines is the national airline of the country and the
government has full control over the company. The company largely
operates as a regional airline with a few long-haul flights. By
December 2021, the company has a fleet consisting of wide-body A330
family and narrow-body A320 family.
Criteria Variation
The rating on SLA's bonds is derived from the rating of an entity
covered by a group that does not assign Recovery Ratings. As a
result, no Recovery Rating was assigned to SLA's bond.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The ratings of SLA bonds are directly linked to the IDR of Sri
Lanka, the guarantee provider. A change in Fitch's assessment of
the IDR of Sri Lanka would automatically result in a change in the
rating on SLA's bonds. In addition, any change in Fitch's view on
the contract of guarantee may result in a downgrade to the
guaranteed securities.
*********
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-
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Marites O. Claro, Joy A. Agravante, Rousel Elaine T. Fernandez,
Julie Anne L. Toledo, Ivy B. Magdadaro and Peter A. Chapman,
Editors.
Copyright 2021. All rights reserved. ISSN: 1520-9482.
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