Fitch Ratings said Wednesday it has decided to keep the credit ratings of Hankyu Holdings Inc. unchanged because the burden stemming from the tender offer for Hanshin Electric Railway Co. shares has stayed within the anticipated level.
Hankyu's long-term foreign and local currency issuer default ratings and senior guaranteed debt ratings stand at BB-plus, and the rating outlook of the company, which presides over railway, travel and hotel operations, is graded as "stable."
By the rating agency's estimates, Hankyu's ratio of interest-bearing debt to earnings before interest, taxes, depreciation and amortization will rise to 10.4 in the year ending next March from 9.7 in fiscal 2005, when the debts undertaken to finance the tender offer and a generous capital investment plan as well as the Hanshin acquisition are taken into account.
The increase is within Fitch's forecast range, the agency said.
Still, even after the Hanshin share purchase has been completed, Hankyu has yet to present a specific vision for its future business activities, it said.
Fitch on the other hand points to possible long-term benefits of the takeover of Hanshin, which could materialize in the form of improved overhead and capital investment cost performance and the two companies' cooperation in real estate development and retail businesses, particularly in the major commercial district of Umeda in Osaka.
Hankyu completed its tender offer Tuesday, taking a 63.71 percent stake in Hanshin at a cost of 249.8 billion yen. If approved at the two companies' shareholders' meetings June 29, Hankyu will turn Hanshin into a wholly owned subsidiary by conducting an equity swap Oct. 1.