KEY RATING DRIVERS
The MTN programme and senior unsecured notes are rated at the same level as BAY's National Long-Term Rating, as they represent the bank's unsubordinated and unsecured obligations. This is in line with Fitch's Bank Rating Criteria for this debt class.
BAY's National Long-Term Rating is driven by expectations of shareholder support from its Japan-based parent, MUFG Bank, Ltd. (A-/Stable). BAY is 76.9% owned by MUFG, and is one of MUFG's largest overseas investments. There are significant levels of management, operational, and marketing integration between BAY and MUFG.
For further details on BAY's key rating drivers and rating sensitivities, please refer to the rating action commentary Fitch Affirms Bank of Ayudhya at 'BBB+' and 'AAA(tha)'; Outlook Stable, dated 27 July 2022.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
BAY's senior debt ratings would be downgraded if the bank's National Long-Term Rating were to be downgraded.
Fitch may downgrade the BAY's National Long-Term Rating if there was any deterioration in MUFG's ability or propensity to support the bank. For example, this may arise from a downgrade of MUFG's Long-Term Issuer Default Rating, or from a material weakening in linkages between MUFG and BAY. Any assessment would also take into account the bank's credit profile relative to other issuers on the Thai national rating scale.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
There is no upside to BAY's National Long-Term Rating and its senior debt ratings, which are already at the highest level on the scale.
BEST/WORST CASE RATING SCENARIO
International scale credit ratings of Financial Institutions and Covered Bond 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
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
BAY's National Ratings are linked to the Long-Term Issuer Default Rating of MUFG.
Additional information is available on www.fitchratings.com
Source: Fitch Ratings