The programme has a maximum size of THB7 billion, comprising debentures and bills of exchange of up to THB3 billion and THB4 billion, respectively. Proceeds will be used for debt repayment and/or working capital.
KTX can issue instruments other than senior unsecured debt under the MTN programme. However, the ratings apply only to the senior unsecured debt under the programme. There is no assurance that notes issued under the programme will be assigned a rating.
KEY RATING DRIVERS
KTX's MTN programme is rated at the same level as its National Long-Term Rating of 'AA-(tha)' and National Short-Term Rating of 'F1+(tha)', as senior unsecured debt under the programme will rank pari passu with the company's other unsecured and unsubordinated obligations. The programme contains a financial covenant of net-debt-to-equity of up to 4x, and we expect the company to maintain the ratio well below the covenant limit.
Fitch uses our shareholder support framework to rate KTX. The company's National Long-Term Rating is three notches below that of its largest shareholder, state-owned Krung Thai Bank Public Company Limited (KTB; AAA(tha)/Stable/F1+(tha)). This reflects KTB's partial ownership of KTX at 50%, with a significant minority shareholder, which leads to lower potential levels of management integration and control compared with other bank-owned securities firms rated by Fitch. We believe the size of the MTN programme would not alter the company's credit profile based on its support-driven rating.
For more details on key rating drivers and sensitivities for KTX, please see our latest commentary, Fitch Affirms Krungthai Zmico Securities at 'AA-(tha)'; Outlook Stable, dated 15 March 2022.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A negative action on KTX's National Long- and Short-Term Ratings would lead to similar action on the ratings of the MTN programme.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
The ratings of the MTN programme will be upgraded if the National Ratings are upgraded.
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
KTX's ratings are linked to the local-currency credit profile of KTB, as denoted by the shareholder bank's National Long-Term Rating.
Additional information is available on www.fitchratings.com
Source: Fitch Ratings