Moody's affirms PSA

Moody's Investors Service said it affirmed PSA Corp. Ltd.'s Aaa issuer following the announcement that its parent, PSA International Pte. Ltd., will acquire a 20% equity and loan interest in Hutchison Whampoa Ltd.'s global port assets for $4.4 billion. The outlook is stable.

The agency said the affirmation reflects the high support from PSA International to PSA and the fact that PSA will also indirectly benefit from expected strong support from Temasek Holdings Pte. Ltd., the ultimate parent company.

The total purchase consideration will be paid in cash and is likely to be fully debt funded by PSA International. Moody's said that while expects the cash return generated from this transaction to partly fund PSA International's incremental interest expense and that PSA International may have the flexibility to scale down its dividend payout to Temasek, the transaction will lead to a significant deterioration in the financial profile of the overall PSA group. The offer price represents close to 70% of PSA International's total assets as of Dec. 31.

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