MOODY'S AFFIRMS TEMASEK HOLDINGS' Aaa RATING; OUTLOOK STABLE

Moody's Investors Service has affirmed the Aaa local and foreign currency issuer ratings of Temasek Holdings (Pte) Ltd (Temasek) in response to the company's announcement that it, together with Siam Commercial Bank (SCB) and a group of Thai investors, has signed an agreement to purchase a 49.6% stake in Shin Corp in Thailand for USD1.9bn. The Temasek-SCB led investor group has also made a general offer for the remaining 50.4% of Shin Corp. The rating outlook remains stable. Moody's says its affirmation reflects the fact that Temasek's financial fundamentals are still sufficient to support its current rating, although the substantial funds required for the acquisition will raise its leverage. Moody's comments that Temasek's Aaa ratings have incorporated the agency's expectation that it would gear up its balance sheet for the transformation plan for its portfolio. However, the ratings are contingent on total debt/total equity not exceeding 30% -- a level which is adequate to support the Aaa rating. The rating agency says that its rating has also factored in a full take-up of the general offer for a further USD2.1bn for Shin Corp by the Temasek-SCB led investor group. The Shin Corp acquisition, expected to be financed by both debt and internal reserves, will raise Temasek's leverage to around 20%, while gross cash flow to gross interest coverage will remain above 20x. The company will continue to maintain sizeable cash and near-cash securities after completion of the transaction. Moody's believes that Temasek's investment portfolio, on average, still exhibits strong rating quality, given its size, individual asset quality, type of industry exposures, reasonable diversity and manageable level of country risk. Temasek's investment in emerging markets has risen, driven by its desire to achieve a more diversified investment portfolio. Consequently, the risk profile of its portfolio has increased somewhat, although the portfolio has become more diversified and now encompasses higher earnings and capital growth potential. Temasek's cash flow, however, still predominantly comes from its listed investee companies in Singapore. Moody's understands that investments in emerging markets continue to represent a relatively low portion of total assets. The company is expected to closely monitor the associated risk, and Moody's expects it to limit its exposure to emerging markets at a certain level during the rating horizon. Furthermore, the Aaa rating continues to reflect Temasek's strong financial profile, underscored by the large recurring dividend income from its high-quality investment portfolio and low leverage. It also reflects the expectation that the company will maintain its sizeable cash and near-cash securities, affording a strong level of debt service coverage in response to any volatility in asset values. Moody's further comments that its Joint Default Analysis is not applicable to Temasek's Aaa rating, which reflects the company's underlying financial strength. In the event that its underlying fundamentals suggest a different rating than Aaa, JDA will become relevant to the rating analysis. Under the JDA methodology, the Aaa rating could come under pressure only if both the ratings of the company and the Singapore government (Aaa), its support provider, were lowered, based on Moody's view of high government support and dependency. Downward rating pressure on Temasek's existing Aaa ratings (reflecting its underlying strengths) could evolve if (1) aggressive investments and/or reinvestments occur, prompting a material deterioration in the credit quality of its investment portfolio, which includes a single large investment in emerging markets; (2) a further weakening occurs in the company's assets and dividend debt service coverage -- possibly resulting from unexpected volatility in its investment operating performance, aggressive investments in high-risk and/or less-stable industries and markets, or any depletion in the size and quality of its cash and near-cash resource (through investments or dividend repatriations); or (3) indications that the company is providing material funding support for non-performing investee companies, or the channeling of financial resources to its government shareholder. Moody's expects Temasek to maintain total debt/total equity not higher than 30%; gross cash flow/interest of 10-15x; and gross cash flow/adjusted debt of 70-85% to support its Aaa ratings. Temasek Holdings (Pte) Ltd, wholly owned by Singapore's Minister for Finance (Inc), is an Asia-focused investment company. Hong Kong Elizabeth Allen Vice President - Senior Analyst Corporate Finance Group Moody's Asia Pacific Ltd. JOURNALISTS: (852) 2916-1150 SUBSCRIBERS: (852) 2916-1121 End.

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