Fitch rates Property Perfect debentures BBB+

Fitch Ratings Thailand Ltd. said it assigned a final BBB+(tha) national long-term rating to Property Perfect PCL's (BBB-(tha)/negative) Thai baht 450 million secured debentures due February 2008.

Proceeds will be used for land acquisition for future project development and for working capital.

The agency said the rating reflects the credit enhancement from the mortgage of freehold land and a 50% principal guarantee by Thai Military Bank PCL (A(tha)/positive/F1(tha)). In the event Property Perfect fails to meet the principal and interest repayments, the bondholders should receive the payment from Thai Military Bank in a lump-sum of Thai baht 225 million upon acceleration of payment.

Property Perfect's stand-alone creditworthiness is relatively weak, Fitch said. The company is exposed to operational risks including an industry-wide slowdown, rising interest rates, a slowdown in inventory turnover due to more intense competition, construction delays and rising construction material costs.

Fitch said these risks are partly mitigated by the company's strong brand recognition in Thailand's single detached housing market, its long experience in large-scale single detached housing development and the credit enhancement from the collateral and partial guarantee.

The company's net debt to EBITDA ratio fell to 9.3x at the end of 2005 from 8.2x a year earlier.

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