TEXT-S&P Rates Temasek's Guaranteed Sr Unsecd Notes 'AAA'

(The following was released by the rating agency)

SINGAPORE (Standard & Poor's) July 17, 2012--Standard &

Poor's Ratings Services today assigned its 'AAA' issue ratings

to the US$1.2 billion 2.375% Series 12 senior unsecured

guaranteed notes due 2023 and the US$500 million 3.375% Series

13 senior unsecured guaranteed notes due 2042 that Temasek

Financial (I) Limited issued under its US$10 billion guaranteed

global medium-term notes program. Temasek Holdings (Private)

Limited (Temasek: AAA/Stable/A-1+) unconditionally and

irrevocably guarantees these notes.

The 'AAA' long-term corporate credit rating and 'aaa'

stand-alone credit profile (SACP) on Temasek reflect the

company's highly diversified and liquid investments, and the

strong business risk profiles of most of its major investments,

which have steady and sustainable cash flows. The rating also

reflects our opinion that there is an extremely high likelihood

that the government of Singapore (AAA/Stable/A-1+; axAAA/axA-1+)

would provide timely and sufficient extraordinary support to

Temasek in the event of financial distress. The company's

exposure to the banking and financial services sectors and

emerging economies temper these strengths.

The benefit from the "extremely high" likelihood of

extraordinary government support would only be reflected in the

rating on Temasek if the SACP is lowered to the 'a' category,

which is currently unlikely, in our view. In our analysis, we

rate Temasek, the holding company, and those special purpose

vehicles that it guarantees.

Temasek's SACP also reflects: (1) the company's

"exceptional" liquidity, which strong recurring dividends from

its investee companies support; (2) steady cash flows from

divestments; and (3) the company's net cash position (including

short-term investments) for the past nine years. Factoring in

the US$1.75 billion new issues, we expect the company's ratio of

unconsolidated gross debt to portfolio value in 2012-2014 to

remain well below 30%, which is commensurate with a 'aaa' SACP.

In our view, Temasek has maintained its conservative and

prudent financial management. This is reflected in the company's

satisfactory financial performance for the fiscal year ended

March 31, 2012. Its portfolio value increased to Singapore

dollar (S$) 198 billion from S$193 billion a year ago. Total

shareholder return declined to 1.5% from 4.6% for fiscal year

ended March 31, 2011. In our view, the return is fair,

reflecting volatile financial markets. The company has taken a

more cautious investment strategy since the 2008 financial

crisis. In 2009, total shareholder return was negative 30%.

Temasek's dividend inflows, divestment proceeds, and its

existing cash and short-term investments should cover potential

new investments comfortably, assuming the level of investments

is similar to the average of the three fiscal years till fiscal

2012. We believe that, even if the company's cash inflows

decrease by 50%, its liquidity sources would likely be enough to

cover the assumed investments by an average of 2x over the next

two fiscal years.

The stable outlook on the rating on Temasek reflects our

opinion of a low likelihood of a significant deterioration in

the company's financial risk profile, given its exceptional

liquidity. In addition, the outlook factors in Standard & Poor's

opinion of ongoing and extraordinary support from the Singapore

government to Temasek.

RELATED CRITERIA AND RESEARCH

-- Rating Government-Related Entities: Methodology And

Assumptions, Dec. 9, 2010

-- 2008 Corporate Criteria: Analytical Methodology, April

15, 2008

-- Rating Methodology For European Investment Holding And

Operating Holding Companies, May 28, 2004

Source: http://news.yahoo.com/text-p-rates-temaseks-guaranteed-sr-unsecd-notes-051857020--sector.html

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