Thai Oil Senior Proposed Unsecured Guaranteed Notes Rated #BBB#

Stocks and Financial Services Press Releases Thursday March 8, 2018 18:09
SINGAPORE--8 Mar--S&P Global Ratings

SINGAPORE (S&P Global Ratings) March 8, 2018--S&P Global Ratings today said it has assigned its 'BBB' long-term issue rating to two proposed senior unsecured guaranteed notes under the global medium-term notes (GMTN) program of Thai Oil Public Co. Ltd. (BBB/Stable/--).

The Thailand-based oil refiner and petrochemical company and its wholly owned finance subsidiary Thaioil Treasury Center Co. Ltd. are co-issuers under the US$1.3 billion program. Thaioil Treasury Center will issue the new bonds. Thai Oil fully, irrevocably, and unconditionally guarantees the notes.

In this like-for-like tender offer, Thai Oil will replace part or all of its two existing debentures maturing in 2023 (US$500 million) and 2043 (US$500 million) with bonds of similar coupon rates and maturities.

The tender offer follows a change in Thailand's tax code in 2017, allowing for withholding tax savings on debts issued by approved entities.

The rating on Thai Oil reflects the company's sound domestic competitive position, robust cash flow generation capacity, and support from its controlling shareholder PTT Public Co. Ltd. (BBB+/Stable/--). Tempering these strengths are the company's cyclical, commoditized, and capital-intensive operations, and potentially rising leverage on large spending in the next four to five years.

The stable outlook on Thai Oil reflects the outlook on the company's parent PTT and our view that Thai Oil will remain a highly strategic member of the PTT group, given the company's operational linkage with the parent and its role as the group's major complex refinery.

We also expect Thai Oil to maintain its record of reliable operations and market position, and remain financially sound through 2019. We anticipate that the company will maintain am adjusted debt-to-EBITDA ratio well below 3.0x over the next 24 months. In 2017, this ratio was 0.6x.

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