April 22 (The following statement was released by the rating agency)
Fitch Ratings (Thailand) Limited has downgraded the National Long-Term rating of Ek-Chai
Distribution System Company Limited's (ECDS) debentures due 2015 to 'AA+(tha)' from
'AAA(tha)'. The Outlook is revised to 'Stable' from 'Negative'.
The downgrade follows the agency's downgrade of Tesco PLC's (Tesco) Long-Term
Issuer Default Rating (IDR) to 'BBB+' from 'A-' with a Stable Outlook. For
further details, please see the commentary entitled 'Fitch Downgrades Tesco to
'BBB+'; Stable Outlook', available on the agency's subscriber website,
Key Rating Drivers
Guarantee from Tesco: The rating of ECDS's guaranteed debentures is based on the
full and irrevocable guarantee provided by Tesco, a majority shareholder of
Limitation on Sovereign Intervention: Tesco would not be liable to pay this
guarantee in case of 1) expropriation or nationalisation of 10% or THB5bn or
more, of the issuer's consolidated fixed assets, or with effect of preventing
the issuer and its subsidiaries from pursuing their ordinary course of business;
or 2) sovereign intervention preventing the issuer transferring monies or
converting foreign currency to pay the obligation under the debentures, or
causing Tesco to lose its status as the majority or controlling shareholder.
Positive: Future developments that may, individually or collectively, lead to
positive rating action include:
- An upgrade of Tesco's rating.
Negative: Future developments that may, individually or collectively, lead to
negative rating action include:
- A downgrade of Tesco's rating.
It should be noted that a one-notch change in an International rating could
result in a change in a National Rating of more than one notch.