Fitch Maintains Singapore Power's 'A+' Ratings on Watch Positive <Origin Href="QuoteRef">SPN.AX</Origin>

(The following statement was released by the rating agency)

SINGAPORE/SYDNEY, March 17 (Fitch) Fitch Ratings has maintained the Rating Watch 
Positive (RWP) on all of Singapore Power Limited's (SP) and SP Power Assets 
Limited's (SPPA) ratings.  This is pending further information on SP's use of 
proceeds from the sale of 19.9% of its 51% stake in SP Ausnet (BBB+/Stable) and 
the sale of a 60% stake in its wholly owned SPI (Australia) Assets Pty Ltd 
(SPIA) to State Grid International Development Limited (SGID), a wholly owned 
subsidiary of the State Grid Corporation of China (SGCC, A+/Stable).  The 
transactions closed in January this year.  A full list of ratings is provided 
below.

KEY RATING DRIVERS

Resolution of RWP: The RWP on SP's and SPPA's rating reflects potential 
improvement in SP's financial profile should the cash proceeds from the two 
transactions (AUD824m from the SP Ausnet sale; SPIA sale proceeds undisclosed) 
and any material reduction in the inter-company loan to SPIA from SP of around 
AUD5bn lead to a sustained reduction in overall debt and leverage at SP. SP's 
standalone credit profile has been constrained by its relatively high leverage, 
with FFO-adjusted net leverage at 4.8x at 31 March 2013 (FYE13). 

The RWP will be resolved when SP provides clarity on the use of proceeds and any 
changes to overall group debt levels and debt structure, which we expect by 
end-July when the company's full-year financials are released.

Parent Support: SP's Issuer Default Ratings (IDR) benefit from a two-notch 
uplift from its standalone credit profile to reflect strong support from its 
parent, Temasek Holdings Pte Ltd (Temasek) and, ultimately, the Republic of 
Singapore (AAA/Stable/F1+). This in turn reflects the importance of SP's 
electricity and gas network assets in Singapore as well as the tangible 
financial support extended by SP's parent in the past.

Strong Business Profile: SP's low business risk is due to its monopoly position 
in electricity and gas transmission and distribution in Singapore; almost wholly 
regulated earnings, which provide stable and predictable cash flows; a strong 
efficiency track record; and a stable and mature regulatory regime.  While the 
divestment of its majority stakes in SP Ausnet and SPIA - its electricity and 
gas distribution assets in Australia - reduces SP's geographic diversity, this 
does not weaken SP's business risk profile given the relative strengths of its 
Singapore operations as compared to those of the Australian businesses. 

RATING SENSITIVITIES

Future developments that may individually or collectively lead to a resolution 
of the RWP and a ratings upgrade or Positive Outlook:

-A reduction in the consolidated debt of SP and any material reduction in the 
inter-company loan to SPIA from SP, such that the positive guidelines for FFO 
Net Leverage and FFO Interest cover below are met on a forecast basis.

Positive: Future developments that may individually or collectively lead to 
positive rating action include

- FFO net leverage above 4x and FFO interest coverage above 4.0x (FYE13: 2.9x) 
on a sustained basis;

- Strengthening of the legal, operational and strategic links with SP's parent 
Temasek and/or the Singapore state

Negative: Future developments that may individually or collectively lead to 
negative rating action include

- FFO net leverage above 5x and FFO interest coverage less than 3.5x on a 
sustained basis;

- Adverse changes in the regulatory system;

- A weakening of the legal, operational and strategic links with SP's parent 
Temasek and/or the Singapore state

Full list of ratings 

Singapore Power Limited: 

Long-Term Foreign and Local Currency IDRs 'A+'; RWP

Long-term foreign currency and local currency unsecured ratings 'A+'; RWP

Short-Term Foreign Currency IDR 'F1'; RWP

SP Power Assets Limited:

Long-Term Foreign and Local Currency IDRs 'A+'; RWP

Short-Term Foreign Currency IDR 'F1'; RWP

Contact: 

Primary Analyst

Isabelle Katsumata

Director

+65 6796 7226

Fitch Ratings Singapore Pte Ltd

6 Temasek Boulevard

#35-05 Suntec Tower Four

Singapore 038986

Secondary Analyst

Sajal Kishore

Director

+61 2 8256 0321

Committee Chairperson

Buddhika Piyasena

Senior Director

+65 6796 7223

Media Relations: Iselle Gonzalez, Sydney, Tel: +61 2 8256 0326, Email: 
iselle.gonzalez@fitchratings.com; Leslie Tan, Singapore, Tel: +65 67 96 7234, 
Email: leslie.tan@fitchratings.com.

Additional information is available at www.fitchratings.com. 

THE ISSUER DID NOT PARTICIPATE IN THE RATING PROCESS OTHER THAN THROUGH THE 
MEDIUM OF ITS PUBLIC DISCLOSURE.

Applicable criteria, "Corporate Rating Methodology: Including Short-Term Ratings 
and Parent and Subsidiary Linkage", dated 5 August 2013 are available at 
www.fitchratings.com

Applicable Criteria and Related Research: 

Corporate Rating Methodology: Including Short-Term Ratings and Parent and 
Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715139

Additional Disclosure 

Solicitation Status 

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=823993

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(Repeat for additional subscribers)

March 17 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has maintained the Rating Watch Positive (RWP) on all of Singapore Power Limited's Href="NewsSearch">SINTT.UL (SP) and SP Power Assets Limited's (SPPA) ratings. This is pending further information on SP's use of proceeds from the sale of 19.9% of its 51% stake in SP Ausnet

SPN.AX (BBB+/Stable) and the sale of a 60% stake in its wholly owned SPI (Australia) Assets Pty Ltd (SPIA) to State Grid International Development Limited (SGID), a wholly owned subsidiary of the State Grid Corporation of China Href="NewsSearch">STGRD.UL (SGCC, A+/Stable). The transactions closed in January this year. A full list of ratings is provided below.

KEY RATING DRIVERS

Resolution of RWP: The RWP on SP's and SPPA's rating reflects potential improvement in SP's financial profile should the cash proceeds from the two transactions (AUD824m from the SP Ausnet sale; SPIA sale proceeds undisclosed) and any material reduction in the inter-company loan to SPIA from SP of around AUD5bn lead to a sustained reduction in overall debt and leverage at SP. SP's standalone credit profile has been constrained by its relatively high leverage, with FFO-adjusted net leverage at 4.8x at 31 March 2013 (FYE13).

The RWP will be resolved when SP provides clarity on the use of proceeds and any changes to overall group debt levels and debt structure, which we expect by end-July when the company's full-year financials are released.

Parent Support: SP's Issuer Default Ratings (IDR) benefit from a two-notch uplift from its standalone credit profile to reflect strong support from its parent, Temasek Holdings Pte Ltd TEM.UL (Temasek) and, ultimately, the Republic of Singapore (AAA/Stable/F1+). This in turn reflects the importance of SP's electricity and gas network assets in Singapore as well as the tangible financial support extended by SP's parent in the past.

Strong Business Profile: SP's low business risk is due to its monopoly position in electricity and gas transmission and distribution in Singapore; almost wholly regulated earnings, which provide stable and predictable cash flows; a strong efficiency track record; and a stable and mature regulatory regime. While the divestment of its majority stakes in SP Ausnet and SPIA - its electricity and gas distribution assets in Australia - reduces SP's geographic diversity, this does not weaken SP's business risk profile given the relative strengths of its Singapore operations as compared to those of the Australian businesses.

RATING SENSITIVITIES

Future developments that may individually or collectively lead to a resolution of the RWP and a ratings upgrade or Positive Outlook:

-A reduction in the consolidated debt of SP and any material reduction in the inter-company loan to SPIA from SP, such that the positive guidelines for FFO Net Leverage and FFO Interest cover below are met on a forecast basis.

Positive: Future developments that may individually or collectively lead to positive rating action include

- FFO net leverage above 4x and FFO interest coverage above 4.0x (FYE13: 2.9x) on a sustained basis;

- Strengthening of the legal, operational and strategic links with SP's parent Temasek and/or the Singapore state

Negative: Future developments that may individually or collectively lead to negative rating action include

- FFO net leverage above 5x and FFO interest coverage less than 3.5x on a sustained basis;

- Adverse changes in the regulatory system;

- A weakening of the legal, operational and strategic links with SP's parent Temasek and/or the Singapore state

Full list of ratings

Singapore Power Limited:

Long-Term Foreign and Local Currency IDRs 'A+'; RWP

Long-term foreign currency and local currency unsecured ratings 'A+'; RWP

Short-Term Foreign Currency IDR 'F1'; RWP

SP Power Assets Limited:

Long-Term Foreign and Local Currency IDRs 'A+'; RWP

Short-Term Foreign Currency IDR 'F1'; RWP

((Bangalore Ratings Team, Hotline: +91 80 6677 2513, Bhanu.priya@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: Bhanu.Priya.reuters.com@reuters.net))

Keywords: Fitch Maintains Singapore Power's 'A+' Ratings on