RPT-Fitch rates SABIC's proposed bonds 'A+(EXP)'
(Repeat for additional subscribers)
Sept 26 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has assigned SABIC Capital II B.V.'s proposed USD1bn 2.625% guaranteed bonds an expected senior unsecured 'A+ (EXP)' rating. The rating is in line with Saudi Basic Industries Corporation's (SABIC; A+/Stable/F1) senior unsecured 'A+' rating. The bonds' final rating is contingent on the receipt of final documentation conforming to information already received and further details regarding the amount and tenor of the notes.
KEY RATING DRIVERS
Guarantee from SABIC
The bonds will benefit from a direct, unconditional, general and irrevocable guarantee from SABIC (the guarantor). The guarantee will be a senior unsecured obligation of SABIC and will rank at least pari passu with all its existing and future senior unsecured and unsubordinated obligations.
Senior Unsecured Obligations of the Issuer
SABIC Capital II B.V. (the issuer) is an indirect wholly owned subsidiary of SABIC incorporated in the Netherlands as a private limited liability company. The company was set up in 2008 as a finance and investment vehicle of the group. The funds it borrows are on-lent to companies of the SABIC Group in the US and it relies on the financial support of SABIC. SABIC has entered into a guarantee agreement with SABIC Capital II B.V. whereby SABIC has unconditionally and irrevocably undertaken to the issuer, among others, that it will make available to the issuer sufficient funds to meet its payment obligations as and when they become due and payable.
Structural Subordination Not A Concern
The guarantee will be structurally subordinated to the claims of the creditors of SABIC and its subsidiaries. In our view, the risk of structural subordination is strongly mitigated by our expectation that the group's consolidated FFO adjusted net leverage will remain below 1.0x over the rating horizon.
Other Terms & Conditions
Other than a negative pledge (with permitted liens), the bonds have no specific covenants. Events of default include cross default or cross acceleration to the debt of the issuer or the guarantor with a USD100m threshold. The bonds are also subject to a bondholders' put option upon the occurrence of a change of control event.
The rating of the proposed instrument is tied to the senior unsecured rating of SABIC. As such, any rating action on SABIC's senior unsecured rating will lead to a similar change on the rating of the proposed notes.
- Housing, jobs data weaken, but overall economic picture still upbeat
- U.S. diplomats, but not prosecutors, seek to quell India dispute |
- Target cyber breach hits 40 million payment cards at holiday peak |
- New York Mayor-elect's reputation for lateness parodied on Twitter
- Last-minute Obamacare exemption for those with canceled plans