Tris Rating assigns an A rating to guaranteed debt worth up to 2.5 billion baht for Pruksa Holding Plc (PSH), with a stable outlook.
The debentures are unconditionally and irrevocably guaranteed by Pruksa Real Estate Plc (PS), PSH's subsidiary.
The guaranteed debentures are ranked pari passu to PS's senior unsecured debentures.
Proceeds from the new debentures are intended to be used to refinance debentures issued by PS (PS20NA) maturing in November 2020.
The ratings reflect PSH's creditworthiness as the holding company of PS, in which PSH holds a 98.23% equity stake, and the significant dividend stream PSH receives from PS.
PS is considered a core subsidiary of PSH in accordance with Tris Rating's group rating methodology.
The ratings for PSH take into consideration the strengths of PS as one of the largest players in the residential property market.
PS's competitiveness is derived from its relatively diverse product portfolio, cost competitiveness, and large backlog that partly secures the company's future revenue stream.
The ratings also take into account the group's moderate financial leverage and concerns over the adverse effects of Covid-19, which could put more pressure on demand for residential property and the profitability of developers in the short to medium term.
The stable outlook reflects Tris Rating's expectation that PSH will be able to deliver operating performance as targeted.
PSH's property subsidiary should be able to transfer its backlog as scheduled.
Despite the stagnant growth in demand from both domestic and foreign homebuyers, coupled with impacts from the pandemic, Tris expects PSH to keep its funds from operations-to-total debt ratio at around 10% this year. The ratio should improve to 15%-20% during 2021-2022.
PSH's debt-to-capitalisation ratio should stay below 50% on a sustained basis.