KEY RATING DRIVERS
Rating Reflects Sovereign's Creditworthiness: The rating is based on the irrevocable and unconditional lease payments from the Treasury Department (TD) of the Ministry of Finance, which is the sole obligor under the lease agreements with DAD. The transaction is linked to the TD's creditworthiness because DAD SPV's cash flow is derived mainly from the lease payments.
Sound Financial Structure: The TD's lease payments come from a budget appropriation each year. DAD SPV has received all lease payments as scheduled since they commenced in July 2008, with the most recent in October 2022. Fitch expects the transaction to be able to maintain a debt service coverage ratio of at least 1x and withstand a refinancing rate higher than the agency's 'AAAsf(tha)' assumption of 15%, based on scheduled annual lease payments. Commingling risks are mitigated by TD's direct lease payments to DAD SPV.
DAD also has a THB2.3 billion credit line from Krung Thai Bank Public Company Limited (AAA(tha)/Stable/F1+(tha)) to advance any unpaid lease payments for the TD. The facility has never been drawn. Fitch believes state support would be forthcoming if needed by DAD, given its state enterprise status. The rating is also underpinned by available reserves and a long-term swap agreement with The Hongkong and Shanghai Banking Corporation Limited (AA-/Stable/F1+), which provides guaranteed returns on cash between 2008 and 2025.
Experienced Originator and Administrator: DAD and Conduit Management Services Limited have served as the transaction originator and administrator, respectively, since the transaction's closing, and have the experience to carry out their duties relating to the transaction.
Adequate Asset Isolation, Sound Legal Structure: The issuer is a special-purpose company incorporated under the laws of Thailand to issue bonds, whose proceeds have been used to purchase the rights to cash flows under a set of agreements.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
The ratings are based on the creditworthiness of the TD, which is a unit of the Ministry of Finance. Fitch considers a downgrade due to asset performance unlikely due to the irrevocable and unconditional pre-determined lease payments from the TD.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
There is no upside to the bonds' National Rating, which is already at the highest level.
USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10
Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.
DATA ADEQUACY
Fitch has checked the consistency and plausibility of the information it has received about the performance of the asset pool and the transaction. Fitch has not reviewed the results of any third party assessment of the asset portfolio information or conducted a review of origination files as part of its ongoing monitoring.
Fitch did not undertake a review of the information provided about the underlying asset pool ahead of the transaction's initial closing. The subsequent performance of the transaction over the years is consistent with the agency's expectations given the operating environment and Fitch is therefore satisfied that the asset pool information relied upon for its initial rating analysis was adequately reliable.
Overall, and together with any assumptions referred to above, Fitch's assessment of the information relied upon for the agency's rating analysis according to its applicable rating methodologies indicates that it is adequately reliable.
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 are linked to Thailand's sovereign credit profile.
Additional information is available on www.fitchratings.com
Source: Fitch Ratings