Moody’s reviews Frasers for downgrade

Moody’s Investors Service said it placed on review for downgrade Frasers Commercial Trust’s Baa2 issuer ratings as well as FCOT Treasury Pte. Ltd.’s Baa2 backed senior unsecured debt ratings. The outlook on all ratings has been changed to rating under review from stable.

The review for downgrade follows Frasers’ announcement of its proposed merger with Frasers Logistics & Industrial Trust, and its subsequent delisting upon completion of the merger.

“The review for downgrade reflects the uncertainty around FCOT’s liquidity position and business strategy following the merger,” said Sweta Patodia, a Moody’s analyst, in a press release.

The merger will trigger an event of default under FCOT’s outstanding bonds, unless the bondholders provide a consent prior to such merger. Further, delisting of FCOT will also result in its bonds being redeemable within 75 days of such delisting. At Sept. 30, FCOT had S$390 million of notes outstanding, representing around 60% of its total outstanding debt. In comparison, it had cash and cash equivalents of only S$21.5 million.

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