Announcements

GCR withdraws Curro’s COH001 Senior Secured Notes Rating on early redemption

Johannesburg, 31 August 2017 — Global Credit Ratings (“GCR”) has withdrawn the final, public long-term credit rating of ‘A(ZA)’ with a ‘Stable’ Outlook accorded to the COH001 Senior Secured Floating Rate Notes or (the ‘Senior Notes’) issued by Curro Holdings Limited (the ‘Issuer’ or ‘Curro’) in November 2013:

R150m, Senior Secured Floating Rate Notes, maturing 26 November 2018, stock code COH001………… A(ZA); Stable Outlook.

RATING RATIONALE

Curro has elected to exercise its right of early redemption on the Senior Notes as provided for in the Applicable Pricing Supplement dated on or about 26 November 2013 and the applicable R2bn Domestic Medium-Term Note Programme Memorandum dated 18 November 2013. Curro redeemed the Senior Notes at face value with any interest accrued thereon up until the redemption date of 26 November 2018. Therefore, post the redemption no COH001 Notes was outstanding. Consequently, GCR has withdrawn its rating on the COH001 Notes.

The final, public ratings accorded to the COH001 Senior Notes related to ultimate payment of interest and principal (as opposed to timely, akin to a loss severity rating). The ratings excluded an assessment of the ability of the Issuer to pay any (early repayment) penalties. For more information on the Transaction, please read GCR’s Curro Holdings Limited R275m Senior Secured Notes Surveillance Report published on 20 December 2016. GCR maintains the rating accorded to the COH002 Senior Secured Notes that are still outstanding.

RATINGS HISTORY

Stock code
Initial rating
Long term rating
Rating outlook
5 Year – COH001 (withdrawn)
26 Nov’13
A-(ZA)
Stable
5 Year – COH002
17 Apr’14
A-(ZA)
Stable
Stock code
Last rating
Long term rating
Rating outlook
5 Year – COH001 (withdrawn)
20 Dec’16
A(ZA)
Stable
5 Year – COH002
20 Dec’16
A(ZA)
Stable

ANALYTICAL CONTACTS

Primary Analyst

Mark Vrdoljak

Senior Structured Finance Analyst

+27 11 784 1771

markvrd@globalratings.net

Secondary Analyst

Tinashe Mujuru

Structured Finance Analyst

+27 11 784 1771

tinashem@globalratings.net

Sector Head: Structured Finance Ratings

Yohan Assous

Sector Head: Structured Finance Ratings

+27 11 784 1771.

yohan@globalratings.net

APPLICABLE METHODOLOGIES AND RELATED RESEARCH

  • Global Master Criteria for Rating Corporate Entities (Feb’17);
  • Global Structurally Enhanced Corporate Bonds Rating Criteria (Oct’16);
  • Curro Holdings Limited’s Corporate Rating Report (May’17) ;
  • Curro Holdings Limited R275m Senior Secured Notes New Issuance Report (Apr’14) and subsequent Tap Issuance Report (Dec’15);
  • Curro Holdings Limited R275m Senior Secured Notes Surveillance Report (Dec’16).

RATING LIMITATIONS AND DISCLAIMERS

ALL GCR’S CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: http://GLOBALRATINGS.NET/UNDERSTANDING-RATINGS. IN ADDITION, GCR’S RATING SCALES AND DEFINITIONS ARE ALSO AVAILABLE FOR DOWNLOAD AT THE FOLLOWING LINK: http://GLOBALRATINGS.NET/RATINGS-INFO/RATING-SCALES-DEFINITIONS. GCR’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, PUBLICATION TERMS AND CONDITIONS AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE AT http://GLOBALRATINGS.NET.

GLOSSARY OF TERMS/ACRONYMS USED IN THIS DOCUMENT AS PER GCR’S STRUCTURED FINANCE GLOSSARY

Agent An agreement where one party (agent) concludes a juristic act on behalf of the other (principal). The agent undertakes to perform a task or mandate on behalf of the principal.
Applicable Pricing Supplement A transaction document that describes the particulars of notes issued.
Arranger Usually an Investment bank that advises and constructs a transaction and acts as a conduit between the transaction parties: Client, Issuer, Credit Rating Agency, Investors, Legal Counsel and Servicers.
Bond A long term debt instrument issued by either: a company, institution or the government to raise funds.
Credit A contractual agreement in which a borrower receives something of value now, and agrees to repay the lender at some date in the future, generally with interest. The term also refers to the borrowing capacity of an individual or company
Credit Rating An opinion regarding the creditworthiness of an entity, a security or financial instrument, or an issuer of securities or financial instruments, using an established and defined ranking system of rating categories.
Credit Rating Agency An entity that provides credit rating services.
Credit Risk The probability or likelihood that a borrower or issuer will not meet its debt obligations. Credit Risk can further be separated between current credit risk (immediate) and potential credit risk (deferred).
Debt An obligation to repay a sum of money.
Domestic Medium Term Note Programme A debt issuance programme that allows an Issuer the continued and flexible issuance of several types of securities in accordance with the programme terms and conditions.
Early Redemption The repurchase of a bond by the issuer before it matures.
Floating Rate Notes Debt securities that have a periodic interest rate reset in relation to the reference rate, i.e. JIBAR.
International Scale Rating LC International local currency (International LC) ratings measure the likelihood of repayment in the currency of the jurisdiction in which the issuer is domiciled. Therefore, the rating does not take into account the possibility that it will not be able to convert local currency into foreign currency or make transfers between sovereign jurisdictions.
Issuer The party indebted or the person making repayments for its borrowings.
Liability All financial claims, debts or potential losses incurred by an individual or an organisation.
Liquidity The ability to repay short-term obligations or short-term availability of liquid assets to a market or entity.
Liquidity Risk The risk that a company may not be able to meet its financial obligations or other operational cash requirements due to an inability to timeously realise cash from its assets. Regarding securities, the risk that a financial instrument cannot be traded at its market price due to the size, structure or efficiency of the market.
Long-Term Rating A long term rating reflects an issuer’s ability to meet its financial obligations over the following three to five year period, including interest payments and debt redemptions. This encompasses an evaluation of the organisation’s current financial position, as well as how the position may change in the future with regard to meeting longer term financial obligations.
Loss A tangible or intangible, financial or non-financial loss of economic value.
Market An assessment of the property value, with the value being compared to similar properties in the area.
Obligation The title given to the legal relationship that exists between parties to an agreement when they acquire personal rights against each other for entitlement to perform.
Pricing A process of determining the price of a debt security.
Principal The total amount borrowed or lent, e.g. the face value of a bond, excluding interest.
Provision An amount set aside for expected losses to be incurred by a creditor.
Rating Outlook A Rating outlook indicates the potential direction of a rated entity’s rating over the medium term, typically one to two years. An outlook may be defined as: ‘Stable’ (nothing to suggest that the rating will change), ‘Positive’ (the rating symbol may be raised), ‘Negative’ (the rating symbol may be lowered) or ‘Evolving’ (the rating symbol may be raised or lowered).
Redemption The repurchase of a bond at maturity by the issuer.
Repayment Payment made to honour obligations in regards to a credit agreement in the following credited order: 3.) Satisfy the due or unpaid interest charges; 4.) Satisfy the due or unpaid fees or charges; and 5.) To reduce the amount of the principal debt.
Securities Various instruments used in the capital market to raise funds.
Security An asset deposited or pledged as a guarantee of the fulfilment of an undertaking or the repayment of a loan, to be forfeited in case of default.
Senior A security that has a higher repayment priority than junior securities.
Short-Term Rating A short term rating is an opinion of an issuer’s ability to meet all financial obligations over the upcoming 12 month period, including interest payments and debt redemptions.
Stock Code A unique code allocated to a publicly listed security.
Structured Finance A method of raising funds in the capital markets. A Structured Finance transaction is established to accomplish certain funding objectives whist reducing risk.
Surveillance Process of monitoring a transaction according to triggers, covenants and key performance indicators.
Transaction A transaction that enables an Issuer to issue debt securities in the capital markets. A debt issuance programme that allows an Issuer the continued and flexible issuance of several types of securities in accordance with the programme terms and conditions.
Ultimate Payment A measure of the principal debt, interest, fees and expenses being repaid over a period of time determined by recoveries.
International Scale Rating LC International local currency (International LC) ratings measure the likelihood of repayment in the currency of the jurisdiction in which the issuer is domiciled. Therefore, the rating does not take into account the possibility that it will not be able to convert local currency into foreign currency or make transfers between sovereign jurisdictions.
Long-Term Rating A long term rating reflects an issuer’s ability to meet its financial obligations over the following three to five year period, including interest payments and debt redemptions. This encompasses an evaluation of the organisation’s current financial position, as well as how the position may change in the future with regard to meeting longer term financial obligations.
Short-Term Rating A short term rating is an opinion of an issuer’s ability to meet all financial obligations over the upcoming 12 month period, including interest payments and debt redemptions.
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