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Moody's affirms Mapletree Commercial Trust's issuer rating

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Moody's affirms Mapletree Commercial Trust's issuer rating

Moody's affirmed Mapletree Commercial Trust's issuer rating at Baa1, following the company's plans to acquire Mapletree Business City Phase 2, along with the common premises of the Mapletree Business City development in Pasir Panjang Road, Singapore, for a sum of roughly S$1.58 billion.

The outlook is stable.

The affirmation reflects Moody's expectation that Mapletree's credit metrics post-acquisition will remain within the parameters of its Baa1 rating since the trust proposes to fund the deal with a mix debt and equity, according to Moody's Vice President and Senior Credit Officer Jacintha Poh. The transaction remains subject to certain closing conditions such as regulatory and unit holder approvals.

Poh added that the planned acquisition is expected to increase the company's reliance on income from its two largest assets — VivoCity and Mapletree Business City — but this will be offset by the assets' high quality and strategic positioning.

Despite inadequate liquidity over the next 12 to 18 months, Moody's expects Mapletree's refinancing risk to be mitigated by the trust's capability to draw on roughly S$550 million of uncommitted facilities as of June 30.

Moody's also looked at Mapletree's governance risk surrounding related party deals between the company and its sponsor, Mapletree Investments Pte. Ltd., and determined that the risk is mitigated by the regulatory oversight provided by the Monetary Authority of Singapore.

The stable outlook reflects Moody's expectation that Mapletree will continue to generate stable cash flow from its current portfolio through its occupancy levels and lease expiries.

As of Sep. 30, US$1 is equivalent to S$1.38.