Fitch Upgrades PTT's Foreign Currency IDR to 'BBB+'

Stocks and Financial Services Press Releases Monday March 11, 2013 14:17
Bangkok--11 Mar--Fitch Ratings

Fitch Ratings has upgraded Thailand-based PTT Public Company Limited's (PTT) Long-Term Foreign-Currency Issuer Default Ratings (IDR) to 'BBB+' from 'BBB' and its Short-Term Foreign-Currency IDR to 'F2' from 'F3'. The Outlook is Stable. At the same time, the agency has affirmed PTT's Long-Term Local-Currency IDR at 'A-', National Long-Term rating at 'AAA(tha)', and National Short-Term rating at 'F1+(tha)'. The Outlook is also Stable. The National Long-Term rating on its senior unsecured debentures has been affirmed at 'AAA(tha)'.

The upgrade of PTT's Foreign Currency IDRs follows the upgrade of Thailand's Long-Term Foreign Currency IDRs on 8 March 2013.
Key Rating Drivers

PTT's ratings reflect its dominant position in Thailand's oil and gas industry, its strategic importance and function as a policy vehicle for domestic energy security and development, and a financial profile adequate for the current ratings. PTT is the sole operator of Thailand's mid-and-downstream gas operations and its key product, natural gas, is a major fuel for the country's electricity generation. PTT is also one of the country's major exploration and production (E&P) companies, and a leading refining and petrochemicals company.

PTT's credit profile is tempered by its vulnerability to fluctuations in commodity prices, significant capex plans, and negative free cash flow (after dividend payout) generation expected at least till 2014. Following a series of acquisitions, PTT's leverage (as measured by net adjusted debt to fund flow from operations) has increased to and is likely to remain around 2.0x-2.2x in the medium-term. This is a level Fitch views as appropriate for its standalone credit assessment of 'A-' considering large and stable cash flows from its gas interests in Thailand.

Following the upgrade, PTT's Long-Term Foreign-Currency IDR is still constrained by that of Thailand's, given the state's direct 51% ownership of the company. Under its parent-subsidiary methodology, Fitch rates PTT on a bottom-up basis, and would provide a single-notch uplift on its standalone profile to reflect implicit support from the state. However, given the current ratings of Thailand, such rating uplift is not at present relevant to the ratings of PTT.

For more information, refer to Fitch's rating action commentary 'Fitch affirms PTT Public Company at 'A-'/'BBB'; Outlook Stable' dated 15 November 2012 and the full rating report dated 31 December 2012, both available on www.fitchratings.com

Rating Sensitivities
Positive: Future developments that may, individually or collectively, lead to positive rating action include
-upgrade of Thailand's IDRs
Negative: Future developments that may, individually or collectively, lead to negative rating action include,

-adverse changes to regulations and to gas sales contracts and pipeline tariffs, large debt funded investments resulting in a sustained deterioration in financial FFO adjusted net leverage over 2.25x for PTT's standalone IDRs of 'A-'

-downgrade of Thailand's IDRs

Latest Press Release

Gavin Bambury named OANDA(R) CEO

A global leader in online multi-asset trading services and currency data and analytics, OANDA Global Corporation is pleased to announce the appointment of industry leader Gavin Bambury as Chief Executive Officer, effective Monday 26 August 2019. Based in...

Thailand Focus 2019 showcases new governments policies to reinforce confidence

The Stock Exchange of Thailand (SET) will hold the annual flagship inbound roadshow "Thailand Focus 2019: Embracing Opportunities - The Next Chapter", during August 28 – 30, 2019 in Bangkok, marking the first conference for the new government to...

SCB joins with Intelspire to help SMEs increase people management efficiency with Timemint, an advanced digital platform powered by SCB Payroll

Siam Commercial Bank (SCB) continues to expand its digital partnerships to help increase efficiency. Recently, the bank joined hands with Intelspire Co., Ltd., a Thai startup and developer of the Timemint Application, a digital platform used for people...

TMB Appoints New Chief Retail Banking Officer (CRBO)

TMB has appointed Mrs. Marie Ramlie as Chief Retail Banking Officer, effective from August 1, 2019. Marie succeeds Roel Huisman who has completed his tenure with TMB on July 31, 2019. Marie has joined TMB as Head of Retail Products since 2013. She was...

Bankruptcy Court dismisses rehab petition against GL, removes automatic stay, and finds GL is not insolvent

The Central Bankruptcy Court has dismissed the rehabilitation petition submitted by JTA against GL as the Court ruled that GL is not insolvent and that JTA's claims have not proven to be true Previously, on August 15, the Central Bankruptcy Court for the...

Related Topics