Moody's assigns ratings to Kagiso Tiso Holdings Proprietary Limited (RF) ('KTH'); stable outlook

25 January 2012

Moody's has finalized the credit rating of KTH pursuant to a credit rating process that commenced in August 2011. Moody's previously rated Kagiso Trust Investments ("KTI") as a result of the bond program that was in existence at KTI and which was subsequently transferred to KTH following the merger of KTI and Tiso Group.  The rating was based on the financial and management information of Tiso Group, KTI and KTH including extensive engagements with the KTH management team. 

Moody's assigned a national scale long term rating of  and a short term rating of, rating KTH as a lower medium investment grade credit.  The long term rating is the same as that enjoyed by KTI, meaning that the long term credit rating of the merged entity remained unchanged.  The short term rating is new to KTH and is marginally more positive than the long term rating. Moody's has a stable outlook on the KTH credit rating.

The rating and outlook are informed by the following factors:

  1. The increased scale and diversity of the KTH investment portfolio
  2. The strong positioning of KTH in the BEE and broader investment landscape
  3. The maturity profile of the KTH non-ring fenced, with approximately R475m of debt maturing within the next two years.
  4. KTH market based leverage which is defined as the average net debt / the estimated market value of the KTH investment portfolio.
  5. KTH interest coverage, calculated as dividends and cash interest over debt service costs.
  6. Moody's expectation that KTH will build a track record of sound corporate and financial governance along with no material change in the KTH's market value leverage, asset concentration and business diversity.

For further information, please download the attached report from Moody's.

Download: 25012012_moodys_investors_service.pdf