Fitch cuts Property Perfect, rates new notes BBB-(tha)

Fitch Ratings (Thailand) said it downgraded the national long-term ratings on the three tranches of Property Perfect PCL secured debentures to BBB-(tha) from BBB(tha). The three tranches total Thai baht 1.55 billion and mature February 2006, August 2006 and February 2007, respectively.

At the same time, Fitch assigned expected national long-term ratings of BBB-(tha) to Property Perfect's new secured debentures of up to Thai baht 450 million maturing April 2008.

The outlook remains negative.

The proceeds from the debentures are to be used for Property Perfect's land acquisition for future development.

Fitch said the rating downgrade reflects the company's further weakening in financial leverage and worse-than-expected earnings growth, which has reduced the company's financial flexibility. While Property Perfect reported improved sales performance of 36% year over year to Thai baht 2.1 billion in the first half of 2005, its earnings growth was hurt by rising construction material costs, which put pressure on margins.

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