KEY RATING DRIVERS
Guaranteed by Daimler: The ratings of the MTN programmes are based solely on the full, irrevocable and unconditional guarantee provided by Daimler. Daimler's Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'A-' is higher than Thailand's Long-Term Local-Currency IDR of 'BBB+'. As a result, the National Rating on the guaranteed medium-term debenture programmes is at the highest end of Thailand's National Rating scale.
Strong Relationship with Daimler: MBTh is 100% owned by Daimler, with which it has strong operational and financial links. MBTh imports both completely built-up vehicles and completely knocked-down kits from Daimler for local assembly and distribution. MBTh also strictly complies with the group's treasury policy.
Luxury Car Leader: MBTh is one of the leaders in Thailand's premium-car market with a market share, in terms of unit sales, of above 50% in 2016. The company also provides hire-purchase and leasing services through its wholly owned leasing subsidiary, Mercedes-Benz Leasing (Thailand) Company Limited (MBLT).
DERIVATION SUMMARY
The ratings of MBTh's guaranteed medium-term debentures programmes are based entirely on the full, irrevocable and unconditional guarantee provided by Daimler.
KEY ASSUMPTIONS
N/A
RATING SENSITIVITIES
Developments That May, Individually or Collectively, Lead to Negative Rating Action
- The guaranteed MTNs could be downgraded if Daimler's Long-Term Foreign-Currency IDR falls below Thailand's Long-Term Local-Currency IDR.
The rating of MBTh's guaranteed MTNs are at the highest end of the National Rating scale, therefore there is no potential rating upside.
LIQUIDITY
Increasing Debt: MBTh's consolidated debt increased significantly to THB31.4 billion by end-2016 from THB19.5 billion at end-2015, mainly to finance the dividend payment to Daimler and fund MBLT's business. MBTh held back dividend payment over 2014-2015 and paid a large accumulated dividend of THB 10.5 billion to its parent in 2016. MBTh's external debt as of end-2016 consisted of bank loans (66%) and Thai baht debentures (34%), all guaranteed by Daimler.
Manageable Liquidity: The company had THB18.8 billion of debt that will mature in 2017. This will be partly covered by cash on hand of THB580 million and available uncommitted credit facilities of THB9.9 billion at end-2016. MBTh also has strong access to further credit facilities and capital markets backed by its strong parent.