Fitch cuts SingPower rating
SingPower denies any intention of raising leverage,
declines to put figure on net debt position
The Business Times, Thursday, 11 March 2004
By Tang Weng Fai
SINGAPORE Power and its subsidiary SP Pow,erAssets (SPPA) have had their foreign currency denominated credit ratings cut to negative from stable by Fitch Ratings. But SingPower says the downgrade has no relevance.
"The change in outlook reflects Fitch's view that the probability of a downward rating outweighs that of other possible developments in the coming 18 months," Fitch said in a statement yesterday.
But a SingPower spokesman said Fitch's report was unsolicited. "Moodys and Standard and Poor's are our official rating agencies, and as such they have better access to our management and financial information."
Moodys and S&P's have not changed their ratings, which are Aal and AA+ respectively, with stable outlooks.
Elaborating on the downgrade, Hong Kong based Fitch analyst Charles Chang told BT: "We believe there are many opportunities in the Greater Asia region over the next 18 months where SingPower could participate in power (asset) auctions."
He said SingPower could take on more debt going forward as it takes advantage of regional power generation and distribution asset sales.
Fitch noted that although SingPower's cash flow remains stable, it could deteriorate with a substantial increase in net debt arising from a large acquisition.
On how much additional debt SingPower is likely to take on, Mr Chang said: "How far they will go is still a moving target, as they have not yet committed to a range."
But SingPower denied any such intentions and denied to put a figure on its net debt. "We haven't stated any intention to adopt in time," said the spokesman.
Last year, SingPower subsidiary SPPA, which holds its electricity and gas distribution network assets, went to the market for what was then the largest locally raised bond issue of US$2.2billion, jointly lead-managed by DBS and Morgan Stanley. SPPA accounts for over 70 per cent of SingPower's cash flow.
Widely believed to be made in preparation for an eventual listing, the funds will be used to restructure SingPower's capital structure and, according to Steve Finch, managing director of DBS debt capital markets, will substantially reduce SingPower's long-term cost capital.
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