Tuesday 11 April 2017 by FIIG Research Company updates

Company updates – Alumina, Emeco, Hyundai Capital Services, Mackay Sugar, Navient Corporation and RSEA

In this week’s company updates, Alumina and Emeco received rating changes, we have a new DirectBond from Hyundai Capital Services, Mackay Sugar provided an update following cyclone Debbie, Navient’s ratings were affirmed by Fitch and RSEA provided its 1H17 results


On 7 April 2017, credit ratings agency Standard & Poor’s (S&P) upgraded the rating on Alumina to BB+ from BB. The outlook remains stable.

Key points:

  • The rating upgrade reflects the sound performance of Alcoa World Alumina and Chemicals (AWAC), and the strategic alignment of Alumina and Alcoa Corp
  • It also reflects expectations that debt at the AWAC operating level will be modest and that AWAC's operating performance will remain steady

As a result of the upgrade, the coupon will step down by 0.5% from 7.25% to 6.75%, starting on 19 May 2017, the next coupon date.


Emeco has received multiple credit ratings and outlook changes from each of the major ratings agencies.

Standard and Poor’s (S&P)

On 7 April 2017, S&P changed the credit ratings of Emeco Holdings Ltd. (Emeco) after reviewing its new capital structure. This follows the completion of its recapitalisation and mergers with Orionstone and Andy’s Earthmovers.

Key points:

  • Emeco’s corporate credit rating has been upgraded to 'B- with a negative outlook', from 'SD'
  • S&P’s negative outlook on the long term rating reflects integration risks and the company's lack of track record in realising synergy benefits
  • Its new senior secured bonds due 2022 were assigned a 'B-' rating

S&P also notes that the sustainability of the capital structure over the next 12 to 24 months will, in part, depend on successful integration of the merger and realisation of synergies. Emeco remains vulnerable to any further deterioration in industry conditions.


On 7 April 2017, Moody’s reviewed and changed the credit ratings for Emeco as follows:

  • Moody’s affirmed Emeco’s corporate family rating at ‘Caa1’
  • Emeco’s outlook was upgraded from negative to stable
  • Emeco’s new senior secured notes were assigned a ‘Caa1’ credit rating
  • Moody’s have withdrawn the ‘Ca’ credit rating on Emeco’s 2019 senior secured 144A notes

Fitch Ratings

On 6 April, Fitch Ratings upgraded Emeco’s long term issuer default rating to ‘CCC’ from ‘RD’. The upgrade of Emeco’s long term issuer default rating reflects its improved debt servicing flexibility following its restructure and mergers.

Fitch views the restructure as a distressed debt exchange and noted that, while the exchange improves liquidity by extending the next debt maturity to 2022, business prospects are weak.

Hyundai Capital Services new DirectBond

Hyundai Capital Services Inc. (HCS) is a joint venture between Hyundai Motor Company (HMC) and General Electric Capital Corporation (GECC). It is a leading financial services company in Korea.

Its principal business areas are automotive finance, automotive leasing and personal loans. HCS derives significant benefits from its relationships with its principal shareholders. As the primary financing arm of HMC, the largest automotive manufacturer in Korea, and Kia Motors Corporation, HCS held the largest share of the Korean automotive financing and automotive lease markets based on sales volume for the year ended 31 December 2016.

The Hyundai Capital Services senior secured fixed rate bond, maturing in March 2022, is Australian dollar denominated and available to wholesale investors only in minimum parcels of AUD10,000, with denominations of AUD5,000 thereafter.

For more information please see the Hyundai Capital Services 2022 bond factsheet.External link - opens in a new window

Mackay Sugar

Mackay Sugar has released an update on cyclone Debbie.

Key points:

  • Mills – Superficial damage
  • Rail assets  Significant track ballast/base washout, as well as culvert destruction. Assessments are still under way, but early estimates put the work identified to date at over $500,000 to repair. Some damage and maintenance is needed on sugar rail bins
  • Crops – Crop damage is still under investigation but may be significant. It may take a few weeks to ascertain as it takes time to see if crops recover
  • Impact on crushing season  While there is a lost week of planned maintenance, this is offset by the reduction in crop yield. Therefore, Mackay Sugar expects the season to run on schedule

Mackay Sugar will provide further comments once it is able to clearly quantify the impact.

More information is available here.External link - opens in a new window

Navient Corporation

Fitch Ratings has affirmed Navient Corporation's long term issuer default rating at BB, short term issuer default rating at B and senior unsecured debt rating at BB.

The rating outlook is stable.

The rating action took into account Navient's strong market position and demonstrated servicing track record in the student loan servicing space, the low credit risk and predictable cashflow nature of its federal student loan assets and fee based businesses, appropriate risk adjusted capitalisation, adequate liquidity and seasoned management team.

The rating agency said the stable outlook reflects the company's ability to continue to access the unsecured debt and asset backed securities markets at a reasonable cost, its maintenance of strong liquidity levels commensurate with upcoming debt maturities, its ability to appropriately manage credit risk on private student loans, and the moderate demand on capital and liquidity from new business initiatives.


RSEA have recorded solid 1H17 results, and announced the acquisition of four outlets in Tasmania.

More information is available here.*

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