Correction: Fitch Upgrades Tunisia's CPG to 'AA(tun)'; Revises GCT's Outlook to Stable |
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Fitch Ratings-London/Tunis - This announcement corrects the version issued yesterday. It clarifies that following the upgrade, the Outlook on CPGCPG
is now Stable. Fitch Ratings has today upgraded Compagnie des Phosphates de Gafsa's (CPG)Compagnie des Phosphates de Gafsa's (CPG)
National ratings to Long-term 'AA(tun)' from 'AA-(minus)(tun)' and Short-term rating to 'F1+(tun)' from 'F1(tun)'. Following the upgrade, the Outlook on the Long-term rating is now Stable. Simultaneously, Fitch has changed Groupe Chimique Tunisien's (GCT) Outlook to Stable from Positive. Its ratings are affirmed at National Long-term 'AA(tun)' and Short-term 'F1+(tun)'. Both CPGCPG and GCT are Tunisia's leading phosphate miner and phosphate fertiliser producer, respectively. The rating actions follow a re-examination of the Tunisian phosphate industry's strong operational ties with the government and the state's demonstrated tangible support, in line with the approach laid out in Fitch's criteria report 'Parent and Subsidiary Rating Linkage; Fitch's Approach to Rating Entities Within a Corporate Group Structure', dated 19 June 2007. Fitch recognises the government's strong influence on GCT and CPGCPG
management in view of its full ownership of both companies. At the same time, Fitch outlines the strategic importance of the phosphate industry for the country in the government's efforts to diversify the economy, maximise the inflow of hard currencies, leverage the value of the country's immense phosphate reserves, while providing an already large, and growing, number of jobs. Therefore, CPGCPG's and GCT's ratings are closely correlated to the Tunisian government's (assumed 'AAA(tun)'), with a two-notch differential. The ratings recognise the Tunisian phosphate industry's high level of integration, as CPGCPG
supplies GCT with all necessary raw phosphate. The ratings continue to reflect their strong operating performance, good cash flow generation and solid liquidity, driven by stronger-than-expected phosphate and fertiliser prices. Rising prices are backed by fundamentally sustainable world demand for agriculture products and a structural need to enlarge planted areas, improve farm yields and produce bigger crops to feed a fast-growing world population. World demand for phosphate is further boosted by the new use of phosphate in the production of bio-energy and the direct application of raw phosphate as an alternative to water-soluble fertilisers. Moreover, short phosphate supplies and depleting world reserves have favoured rising prices; therefore, Fitch expects phosphate miners and fertiliser producers to enjoy strong earnings and cash flow generation in the short- to medium-term. GCT's and CPGCPG
's revenues increased 22% in FY07 to TND1,357m and TND414m, respectively. EBITDAR margins were among the highest in the industry, at 37.5% for CPGCPG (26% in FY06) and 30.8% for GCT (16% in FY06). CPGCPG's funds from operations (FFO) doubled to TND144.4m while GCT's FFO increased 62% to TND314.7m. Cash position also improved to TND215.4m for CPGCPG (TND178.9m in FY06) and to TND556.3m for GCT (TND345.3m in FY06). Gross debt remained relatively low (TND91.3m for CPGCPG and TND34m for GCT), with leverage ratios (gross debt/EBITDAR) further decreasing to 0.6x for CPGCPG (0.8x in FY06) and 0.1x for GCT (0.2x in FY06). Coverage ratios were strong, with FFO/gross interest at 39x for CPGCPG and 1,046x for GCT. The ratings reflect, however, the lack of diversification and the cyclicality of the world agriculture market, which depends on factors as varied as climate and geopolitics. The ratings are also constrained by the exposure to international trade prices and the fluctuation of the US dollar/Tunisian dinar exchange rate.
The rating report for GCT and CPGCPG
will be available shortly on Fitch's public website www.fitchratings.com.tn under "Issuers and Rated Issues". - Ends -
About Fitch
Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(tun)' for National ratings in Tunisia. Specific letter grades are not therefore internationally comparable.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available
For more information, please contact:
Wassel Madani / Kalthoum Sammari
Tunis
Tel: +216 71 840 902
Media Relations:
Peter Fitzpatrick
London
Tel: + 44 (0)20 7417 4364
© Press Release 2008
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