Money news | Earnings, Financial industry and Economic

Rpt fitch affirms wso finance pty limited at bbb+; outlook stable


´╗┐(Repeat for additional subscribers)Sept 19 (The following statement was released by the rating agency)Fitch Ratings has affirmed the ratings of WSO Finance Pty Limited's (WSO Finance) senior secured bank debt facilities, comprised of the this site tranche A loan due September 2014: affirmed at 'BBB+'; Outlook Stable;AUD250m tranche C loan due December 2015: affirmed at 'BBB+'; Outlook Stable;AUD250m tranche B1 loan due December 2015: affirmed at 'BBB+'; Outlook Stable; andAUD255m tranche B2 loan due September 2017: affirmed at 'BBB+'; Outlook Stable.

The affirmation of WSO Finance's senior bank loan ratings is supported by the importance of the M7 as an integral link in Sydney's orbital road network, both for local and regional traffic, and by the expected ability of project cashflows to service debt comfortably even in conservative downside scenarios. KEY RATING DRIVERS The Westlink M7 acts as an important road link for Sydney and for interstate traffic. The road serves the expanding suburbs and business areas of western Sydney, and links the M5, M2 and M4 motorways. In addition, the Westlink M7 is a major freight corridor that links the major southern and northern national highways in Sydney's west.

Traffic growth on Westlink M7 slowed to 1.3% in FY12 (year ending 30 June), well below the historical average due to a combination of construction works on the adjoining Hills M2 motorway, and slower economic growth. Traffic growth rebounded somewhat to 3.6% in FY13 as the Hills M2 achieved staged reopening (with final completion on 1 August 2013) but new widening works on the M5 (which links to the southern end of the Westlink M7) commenced. Growth should improve over the next 12 to 18 months as all construction work is completed. Volume risk is assessed as "Midrange". Toll rates on the Westlink M7 change in line with consumer price inflation, as per the concession agreement, and would therefore be constrained if Australia entered a period of low inflation. Price risk is assessed as "Midrange". While typical of the Australian market, the bullet debt structure is a weaker attribute compared to other global Fitch-rated toll roads. However, WSO has a proven track record of refinancing debt well in advance of maturity, and is assisted in that regard by its shareholders Transurban (50%, A-/Stable), QIC (25%), and CPPIB (25%). WSO benefits from its shareholders' global banking relationships and capital markets experience. Structural features include reserve accounts for both debt service and major maintenance. Interest hedging is in place, although this does not extend past the current debt maturity dates.

The Debt Structure risk attribute is assessed as "Midrange". Financial metrics are good for a 'BBB' category rating. Given the lack of scheduled amortisation and the existence of a finite end date on the concession, Fitch has evaluated WSO on a synthetic annuity 20 year debt service capital ratio (DSCR), and concession life cover ratio (CLCR), as well as gearing. The minimum CLCR in Fitch's base case is 2.87x which, along with average annuity DSCR of 2.84x, indicates a strong ability to retire debt. Net debt/EBITDA is at 7.1 in FY13 in Fitch's base case (based on actual results through March 2013), and is expected to drop to 5.4 by FY16. Finally, the transaction is resilient to interest rate stress scenarios. The Debt Service risk attribute is assessed as Midrange. Westlink's major maintenance program is reviewed on a periodic basis by Evans and Peck, a global infrastructure advisory firm, and approved by Westlink's board. Asset class reviews are performed regularly with the participation of 50%-owner Transurban. While the Lend Lease and Leighton Contractors joint venture is contracted for everyday operations and management, major expenditures such as re-sheeting are put out for tender. Westlink benefits from Transurban's scale in negotiating with Australian contractors. A maintenance reserve is required by current debt documents. Infrastructure renewal is assessed as "Stronger". RATING SENSITIVITIES The rating is constrained by its higher leverage compared to other Fitch-rated Sydney roads, including Interlink Roads Pty Limited (A-/Stable) and AMT Management Limited (A-/Stable). While its location in a high growth area of Sydney can provide upside in a positive economic environment, this may also create greater volatility in the event of an economic downturn. WSO Finance's ratings could come under downward pressure in the near term in the event that the refinancing of Tranche A (due September 2014) was not completed by June 2014. A rating upgrade would be considered if operations improved such that net debt/EBITDA fell below 6.0 for a sustained period.

Saudi arabias takween signs $347 mln loan for savola packaging buy


´╗┐DUBAI, March 11 Saudi Arabia's Takween Industries signed a 1.3 billion riyal ($346.6 million) Islamic loan with a group of local banks to fund the acquisition of Savola Packaging Co, it said on Wednesday. Takween in December agreed to buy the packaging unit of the region's largest food firm Savola Group for 910 million riyals ($242.5 million). The loan has two parts, according to a Takween bourse filing. As well as a seven-year facility to cover the full cost of the acquisition including the assumption of Savola Packaging's debt, which has a one-year grace period before repayments start, there is a further 390 million riyal three-year loan which will be used by Takween for working capital.

The loan, provided by Arab National Bank, Samba Financial Group and Bank Albilad, is guaranteed against shares and revenue of Savola Packaging and its subsidiaries, promissory notes and director guarantees.

Takween added the payment of the purchase price and transfer of ownership is currently in progress, but it did not specify a date for the formal completion of the deal.