RCS Trust

The stable outlook on RCS reflects our view that the trust will remain a highly important subsidiary of CMT. The outlook also reflects our expectation that CMT will maintain stable performance over the next 24 months. We could downgrade RCS if: (1) we lower the credit assessment on CMT; (2) we believe that support from the sponsors has waned; or (3) the trust's shareholding structure changes materially. Rating pressure could increase if CMT's funds from operations (FFO)-to-debt ratio weakens below 9%. The most likely cause for this deterioration could be CMT embarking on an aggressive debt-funded growth strategy that is outside our expectations. A prolonged economic downturn that results in lower occupancy, declining rentals, and weakened operating efficiency could also

...Benefit from strong sponsor support to continue. RCS Trust (RCS) is a key investment of its sponsor CapitaLand Mall Trust (CMT). We assess CMT's credit profile at 'a'. The rating on RCS therefore benefits from credit uplift provided by CMT. The stable operation at the sponsor level is supported by its 15 retail malls with strong entrenched positions in Singapore. Stand-alone business to remain stable. On a stand-alone basis, RCS' operations benefit from stable occupancy (of more than 95%) and rental income, backed by a well-located and high quality asset....

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