Mirvac REIT buy-out a ratings plus

In other ratings reviews over the last week Moody's otherwise restricted itself to comments on announcements by Transurban and Lend Lease. On Transurban's announcement of an in-principle agreement being reached with the New South Wales government on a A$550 million upgrade to the Hills M2 Motorway, Moody's said "Transurban has a solid financial profile at its rating level". And, "To the extent that Transurban proceeds with the project on the terms announced, we consider that the group has sufficient flexibility within its rating to undertake such a project."

Moody's expects Transurban to adopt a prudent approach to funding for the project such that its financial profile remains within Moody's rating tolerance. Moody's also considers the execution risk to be manageable given the group's track record and the brown-field nature of the project.

Transurban Finance has A$1.05 billion of bonds outstanding in the domestic market with maturities ranging from December this year to November 2017. Transurban has also issued more than US$1.2 billion of bonds in the US traditional private placement market.

On Lend Lease's proposal to convert itself into a stapled entity, Moody's said it does not see any immediate impact on Lend Lease's credit profile, at this stage. This view is based on the understanding that the proposed structure, which is subject to shareholder approval, will not result in major changes to the company's distribution policy and that the assets of the company will not be affected. Moody's will seek further clarification.

Lend Lease no longer has any bonds outstanding in the domestic market but has US$300 million outstanding in the US traditional private placement market and has a ₤300 million, October 2021, Eurobond outstanding.

S&P also felt compelled to comment on Mirvac Group's proposed acquisition of the 75.4 per cent of Mirvac Real Estate Investment Trust that it does not already own. The move will have no immediate affect on the 'BBB/Positive/A-2' ratings S&P assigns to the group.

S&P went on to observe that the long-term rating on Mirvac could be upgraded to 'BBB+' in the next 12 to 18 months if Mirvac completes the proposed transaction, progresses the rationalisation of its non-core activities and successfully navigates the challenging operating environment while maintaining a financial profile consistent with a 'BBB+' rating.

Mirvac has A$300 million of March 2010 bonds and A$200 million of September 2010 bonds outstanding.