The debentures have a maturity of one year. The firm plans to use the proceeds to finance its working capital.
KEY RATING DRIVERS
Fitch rates DAOLSEC's subordinated debentures one notch below the anchor rating, which is the 'BB+(tha)' National Long-Term Rating, to reflect the subordinated debentures' higher loss-severity risk relative to senior unsecured instruments, as per Fitch's Corporate Hybrids Treatment and Notching Criteria.
The notching also incorporates the debentures' subordinated status, as subordinated noteholders rank after senior creditors in priority of claims. There is no additional notching for non-performance risks due to the notes' lack of going-concern loss-absorption and equity-conversion features. Fitch has not assigned equity credit to the issue, as the instrument is not designed to be a permanent part of the company's capital structure.
For further detail on DAOLSEC's key rating drivers and rating sensitivities, please see our latest commentary titled "Fitch Places DAOL SECURITIES (THAILAND) on Rating Watch Negative", dated 25 November 2022.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
The rating of DAOLSEC's subordinated debentures will be downgraded if the National Long-Term Rating is downgraded.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
A removal of the RWN on the National Rating would result in similar action on the rating of the subordinated debentures.
The rating of DAOLSEC's subordinated debentures will be upgraded if the National Long-Term Rating is upgraded. However, there is limited upside potential for the National Long-Term Rating, given the RWN.
DATE OF RELEVANT COMMITTEE
24 November 2022
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.
Additional information is available on www.fitchratings.com
Source: Fitch Ratings