Fitch Ratings (Thailand) Limited has affirmed DAD SPV Company Limited's (DAD SPV) bonds at 'AAAsf(tha)' with a Stable Outlook. The transaction is a CMBS backed by 30-year lease and fee payments from the government office centre in northern Bangkok, which is developed and managed by the Ministry of Finance's wholly owned asset-development company, Dhanarak Asset Development Company Limited (DAD).
KEY RATING DRIVERS
Credit Quality: The ratings reflect irrevocable and unconditional lease payments from the Treasury Department (TD) of Thailand's Ministry of Finance, which is the sole obligor under the lease agreements with DAD. The transaction is therefore linked to the creditworthiness of the TD as DAD SPV's cash flows are derived mainly from the lease payments.
Financial Structure: The lease payments from the TD come from a government budget appropriation each year. DAD SPV has received all lease payments as scheduled since the start of the payments in July 2008, with the most recent in October 2019. Based on scheduled annual lease payments, Fitch expects the transaction to be able to maintain a debt-service coverage ratio of at least 1x and withstand a refinancing rate higher than the agency's 'AAAsf(tha)' assumption of 15%. Lease payments from the TD are made directly to DAD SPV, mitigating commingling risks. DAD also has a THB2.3 billion uncommitted liquidity facility from Krung Thai Bank Public Company Limited (AA+(tha)/Stable/F1+(tha)) to advance any unpaid lease payments for the TD. To date, this facility has never been drawn. Fitch believes state support would be forthcoming if needed by DAD due to its state-owned enterprise status.
The ratings are also underpinned by available reserves and a long-term swap agreement with The Hongkong and Shanghai Banking Corporation Limited (AA-/Stable/F1+), which is providing guaranteed returns on cash between 2008 and 2025.
Operational Risks: DAD and Conduit Management Services Limited have served as the transaction originator and administrator, respectively, since closing, and have the experience to carry out their duties related to the transaction.
Asset Isolation and Legal Structure: The issuer is a special-purpose company incorporated under the laws of Thailand to issue bonds, whose proceeds have been used to purchase the rights to cash flows under a set of agreements.
The ratings are based on the creditworthiness of TD, which is a unit of the Ministry of Finance. Fitch considers a downgrade due to asset performance unlikely due to the irrevocable and unconditional pre-determined lease payments from the TD.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.
Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset and the transaction. There were no findings that were material to this analysis. Fitch has not reviewed the results of any third-party assessment of the asset portfolio or conducted a review of origination files as part of its ongoing monitoring.
Overall, Fitch's assessment of the asset pool information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable.
SOURCES OF INFORMATION
The information below was used in the analysis:
- Transaction reporting data provided by the transaction administrator, Conduit Management Services, as of 31 January 2020.
- Financial data provided by DAD as of 31 December 2019.
The issuer has informed Fitch that not all relevant underlying information used in the analysis of the rated notes is public.
The full list of rating actions is as follows:
DAD SPV Company Limited
- DAD20NA (ISIN: TH088803UB03) National Long-Term Rating affirmed at 'AAAsf(tha)'; Outlook Stable
- DAD20NB (ISIN: TH0888A3UB08) National Long-Term Rating affirmed at 'AAAsf(tha)'; Outlook Stable
- DAD25NA (ISIN: TH0888035B07) National Long-Term Rating affirmed at 'AAAsf(tha)': Outlook Stable
- DAD25NB (ISIN: TH0888A35B09) National Long-Term Rating affirmed at 'AAAsf(tha)'; Outlook Stable
- DAD25NC (ISIN: TH0888B35B08) National Long-Term Rating affirmed at 'AAAsf(tha)'; Outlook Stable
Additional information is available on www.fitchratings.com