The final rating reflects the credit enhancement provided to investors by the unconditional and irrevocable guarantee from Thailand-based Bangkok Bank Public Company Limited (BBL, BBB/Stable) acting through its Singapore branch.
The final rating is in line with the expected rating assigned on 8 July 2021 and follows the receipt of final documents conforming to information already received with the final maximum guaranteed amount, which is 115% of principal, deemed sufficient to cover the principal, and potential accrued and deferred interest, and interest on the deferred interest of the notes that can be accumulated during the first five-year period until the effective maturity date in 2026.
KEY RATING DRIVERS
Notes Equalised to Guarantor's Rating: The notes are rated at the same level as BBL's senior unsecured rating to reflect the credit enhancement provided to investors by the unconditional and irrevocable guarantee from BBL acting through its Singapore branch. The guarantee ranks pari passu with BBL's unsecured and unsubordinated obligations.
Effective Maturity Date in 2026: The guarantee will be in full effect until the earliest of the payment in full of the securities and the first reset date in 2026, provided security holders respond in the manner required by the securities documentation. Should MINT not call the notes prior to the first reset date (non-call event), the guarantor is required to purchase the notes at a price that covers the principal amount, premium, accrued interest, any deferred interest, and interest on interest deferred. In addition to the mandatory purchase on a non-call event, if MINT goes into bankruptcy before the first reset date, BBL will also be obliged to purchase the notes at a price that is calculated on the same basis as above. Fitch sees the notes' first reset date as the effective maturity date.
Maximum Guaranteed Amounts: The total guarantee amount from BBL is limited to a maximum of 115% of the principal of the notes. This is deemed sufficient to cover the principal, potential accrued and deferred interest, and interest on deferred interest of the notes that can be accumulated during the guaranteed period.
DERIVATION SUMMARY
The rating on MINT's guaranteed notes is based solely on the unconditional and irrevocable guarantee from BBL.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
- An upgrade of BBL's ratings would result in an equivalent change in the ratings on MINT's notes, which are based solely on BBL's guarantee.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
- A downgrade of BBL's ratings would result in an equivalent change in the ratings on MINT's notes, which are based solely on BBL's guarantee.
For the ratings of BBL, the following sensitivities were outlined by Fitch in a rating action commentary dated 26 March 2021:
IDRS, NATIONAL RATINGS AND SENIOR DEBT
Factors that could, individually or collectively, lead to positive rating action/upgrade:
- There could be positive rating action on BBL's Issuer Default Ratings (IDR), National Ratings and senior debt ratings following similar changes in either its Support Rating Floor or Viability Rating. The National Ratings of BBL would also take into account the relative creditworthiness of peers rated on the national scale.
Factors that could, individually, or collectively, lead to negative rating action/downgrade:
- Concurrent negative action on BBL's Viability Rating and Support Rating Floor would lead to similar action on the bank's Long-Term IDR, National Long-Term Rating and senior debt rating. BBL's National Rating could also be downgraded to 'AA(tha)' if, in our opinion, its credit profile weakens on a relative basis in the National Rating universe of rated entities in Thailand.
VIABILITY RATING
Factors that could, individually or collectively, lead to positive rating action/upgrade:
- BBL's Viability Rating could be upgraded to 'bbb+' if its key financial profile metrics were more consistent with those of higher-rated banks in similarly rated operating environments. This includes maintaining an impaired loan ratio of less than 3% and an operating profit/risk-weighted asset ratio of above 2.5% (2020: 0.76%), combined with sound loan-loss reserves and core capital buffers; for instance, a common equity Tier 1 (CET1) ratio sustainably above 16%. Maintaining improved asset quality would support earnings, which, in turn, would support medium-term profit retention and capitalisation.
Factors that could, individually, or collectively, lead to negative rating action/downgrade:
- The Viability Rating could be downgraded to 'bbb-' if the bank's financial position were to deteriorate below our expectation. This would likely be reflected by downward revisions to multiple rating factors, which may be a result of a much weaker operating environment; for example, such stresses may be indicated by an impaired loan ratio of above 6% for a sustained period, combined with weaker loss absorption buffers, such as a CET1 ratio of below 13% and a loan-loss coverage ratio of below 120% (2020: 178%).
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.
ISSUER PROFILE
MINT is one of the Asia Pacific's largest hospitality and leisure companies. MINT owns 94% of NH Hotel Group S.A. (NHH, B-/Negative) following the acquisition in 2018. MINT is listed on Thailand's stock exchange and NHH on Madrid's stock exchange.
DATE OF RELEVANT COMMITTEE
01 July 2021
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
The ratings of MINT's guaranteed senior perpetual capital securities are directly linked to the senior unsecured rating of BBL, the guarantee provider. A change in Fitch's assessment of the senior unsecured rating of BBL would automatically result in a change in the rating on MINT's notes. In addition, any change in Fitch's view on the contract of guarantee may result in a downgrade to the guaranteed securities.
Additional information is available on www.fitchratings.com
Source: Fitch Ratings