Fitch Rates Phaello's DMTN ZAR200m note 'A-(zaf)'
Fitch Ratings-London/Johannesburg-22 January 2010: Fitch Ratings has today assigned South Africa-based Phaello Finance Company (Pty) Ltd's (Phaello) new ZAR200m domestic medium term note (DMTN) note issue an 'A-(zaf)' rating.
The structure for the new issue is similar to that of the existing notes issued by Phaello, which are also rated 'A-(zaf)'. All notes have been issued under Phaello's ZAR5bn DMTN programme which sets out the terms and conditions. The programme contains rating downgrade triggers exist at 'BBB-(zaf)'.
The ZAR200m note is rated on a senior secured basis, with a floating rate of interest at JIBAR plus 300bps. The first interest payment is on 6 April 2010, and every three months thereafter until maturity. The note has an effective maturity of 6 April 2015 and is subject to standard cross-default and change of control clauses. Phaello plans to use the proceeds from the issue for general corporate purposes, which may include repayment of short-term banking facilities.
Phaello is an operating company, and enters into master lease agreements with Unitrans Services (Pty) Ltd. Steinhoff International Holdings Ltd (Steinhoff), rated 'A-(zaf)'/'F2(zaf)'/Stable, has issued a guarantee in favour of Phaello, where it guarantees the timely payment of all the obligations of Unitrans Services (Pty) Ltd under the master lease agreement. The Phaello Finance Company Guarantor (Pty) Ltd holds the general notarial bond and various other agreements on behalf of lenders.
Phaello is therefore rated on the strength and the support expected from the guarantor Steinhoff as well as the additional security in the vehicles, and the liquidity facility available to Phaello. Phaello's rating is directly linked to that of Steinhoff, and any change in Steinhoff's ratings would result in a change of Phaello's rating.
Contact: Roelof Steenekamp, Johannesburg, Tel: +27 11 380 0903; Karabo Matentji: +27 11 380 0910.
Media Relations: Peter Fitzpatrick, London, Tel: + 44 (0)20 7417 4364, Email: peter.fitzpatrick@fitchratings.com.
Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(zaf)' for National ratings in South Africa. Specific letter grades are not therefore internationally comparable.
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