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MBSA-Rating Affirmation by Fitch
Mercedes-Benz South Africa Limited (Incorporated in the Republic of South Africa) (Registration No.
1962/000271/06)
Bond Issuer code: MEC
(“Mercedes-Benz” or “the Issuer”)
Affirmation of Mercedes-Benz of South Africa’s ZA35 billion DMTN Programme at AAA(zaf) by
Fitch Ratings
Fitch Ratings - Frankfurt am Main - 21 May 2019: Fitch Ratings has affirmed Mercedes-Benz South
Africa Limited's (MBSA) ZAR35 billion domestic medium-term note (DMTN) programme's National
Long-Term Rating at 'AAA(zaf)' and National Short-Term Rating at 'F1+(zaf)'. The affirmation applies
to approximately ZAR30.7 billion of notes outstanding as of 31 March 2019.
MBSA's bond issue ratings continue to reflect the strong linkage between the company and its
German parent, Daimler AG (Daimler; A-/Stable), which is driven by the guarantee provided by
Daimler for MBSA's DMTN programme. The ratings also reflect Daimler's strong strategic, technical
and operational relationship with the South African company, which benefits significantly from
MBSA's business profile in the local automotive industry.
Key Rating Drivers
Parent Guarantee: MBSA's programme ratings continue to reflect the irrevocable and unconditional
guarantees provided by Daimler, MBSA's sole shareholder.
Strong Parental Linkage: Fitch assesses the linkage between Daimler and MBSA as strong given the
robust legal, operational and strategic links. The main driver is the explicit shareholder support
MBSA receives from Daimler's guarantee of its ZAR35 billion DMTN programme.
Large and Diversified Group: Daimler has wide geographical and business diversification. It has
leading positions in the premium passenger-car segment with its Mercedes-Benz and Smart brands.
Daimler Trucks is the world's largest heavy-truck manufacturer in unit sales. It is the largest in
Europe and North America and the second or third largest in several other countries/regions,
including Brazil and Japan. The group also holds leading positions in the global van and bus markets.
Derivation Summary
MBSA's rating is based on Fitch's assessment of strong links between the group and its parent,
Daimler. Fitch views the unconditional and irrevocable guarantee from Daimler in respect of MBSA's
DMTN programme as the key rating factor. MBSA is strongly positioned compared with other South
African national scale peers due to its parent company rating being higher than the South African
sovereign rating.
Key Assumptions
Fitch's key assumptions for MBSA include:
- Continuing irrevocable and unconditional guarantee from Daimler for MBSA's DMTN programme.
Rating Services
Future Developments That May, Individually or Collectively, Lead to Positive Rating Action
- No positive rating action is possible, as MBSA is already at the highest possible rating.
Future Developments That May, Individually or Collectively, Lead to Negative Rating Action
- Any negative rating action on MBSA would be linked to negative rating action on Daimler.
- Weakening of the linkage between MBSA and Daimler.
Centurion
29 May 2019
Debt Sponsor: The Standard Bank of South Africa Limited
jsesponsor@standardbank.co.za
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