Moody's issued BWP Trust an initial A3 issuer rating with a stable outlook.
The rating decision is made on the back of the retail real estate investment trust's strong financial profile, as highlighted by its net debt/EBITDA of 3.3x and EBITDA interest cover of 6.1x for the six months ended Dec. 31, 2017.
Moody's also cited the Australian company's long-term strategic alignment with its biggest tenant Bunnings Group Ltd. as a factor that benefits its rating.
Additionally, the A3 issuer rating reflects the trust's good quality asset base and a simple business model. BWP's stable cash flow is generated entirely from rental income, according to the report, which added that Bunnings contributes more than 90% of the revenue.
The stable outlook indicates Moody's expectation that BWP's lease agreements with Bunnings will provide a predictable earnings profile in the long term and that capital management policies will remain conservative.
