Following the merger announcement between Mapletree Commercial Trust (MCT) with Mapletree North Asia Commercial Trust (MNACT), Moody’s has placed the former’s Baa1 rating on review for downgrade and the latter’s Baa3 rating on review for upgrade. Concurrently, Moody’s has also placed MCT’s and MNACT’s senior unsecured notes on review for downgrade and upgrade respectively. Junling Tan, a Moody’s Analyst said, “The review for downgrade reflects the potential weakening of MCT’s credit metrics and uncertainty around its financial policy following the merger with MNACT. However, the final impact remains uncertain as the merger is still subject to, amongst others, the approval of the unitholders.” Tan added, “The review for upgrade reflects our expectation that MNACT’s rating could benefit from its 100% ownership by MCT, following the completion of the proposed merger. However, the final impact on MNACT’s rating will depend on our assessment of the likelihood of extraordinary support that MCT will provide to MNACT in case of distress.”

MCT’s SGD 3.05% 2029s are trading 0.23 points lower at 103.27 yielding 2.59% while MNACT’s SGD 3.5% Perps are trading 0.6 points higher this week at 97.89 yielding 4.03%.

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