Moody's affirms Stats ChipPAC

Moody's Investors Service said it affirmed the Ba1 corporate family rating and Ba1 senior unsecured debt rating of Stats ChipPAC Ltd.

The outlook remains stable.

The affirmation follows news that the company has proposed a cash distribution of as much as $813 million to shareholders.

While the proposed capital reduction will increase its leverage and weaken its standalone credit fundamentals, the Ba1 rating will continue to reflect the support that Temasek (rated Aaa with stable outlook) is likely to provide in a distress situation, Moody's said.

The rating further recognizes Stats ChipPAC's strong back-up liquidity arrangement and expected strong industry fundamentals, the agency added.

However, any further debt-funded capital reduction programs or expansion plans, which weaken its underlying credit fundamentals, will pressure the rating, Moody's said.

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