Moody’s rates ST Engineering program Aaa

Moody's Investors Service said it assigned a provisional Aaa rating to the proposed S$5 billion senior global medium-term note program by ST Engineering RHQ Ltd., ST Engineering Treasury Pte. Ltd. and ST Engineering Urban Solutions USA Inc., which are subsidiaries of Singapore Technologies Engineering Ltd. (Aaa, negative).

The program is irrevocably and unconditionally guaranteed by Singapore Technologies Engineering.

The outlook is negative.

The agency said the rating reflects Moody's expectation of very strong ongoing support from the Singapore government (Aaa, stable).

“Higher growth and EBITDA margins from TransCore will help ST Engineering recover to its pre-pandemic EBITDA margins of 13%-14% in 2022-23. However, gross debt/EBITDA will increase to 5.4x in 2022 (assuming nine-months' contribution from TransCore), before declining to 4.5x in 2023, as ST Engineering will benefit from higher growth at TransCore and its urban solutions and satcom (USS) business as well as the ongoing recovery in its commercial aerospace segment,” Nidhi Dhruv, a Moody's vice president and senior analyst, said in a news release.

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