Bangkok--22 Nov--Fitch Ratings
Fitch Ratings (Thailand) Limited has today assigned a ‘AAA(tha)’ National Long-term rating to PTT Public Company Limited’s (PTT; National Long-term rating: ‘AAA(tha)’/Stable) upcoming 100-year senior unsecured debentures with the amount of up to THB3bn. The proceeds will be used for general corporate purposes. The issue, which is the first 100-year senior unsecured bond in Thailand, has put options at both year 50 and year 75.
PTT’s ratings reflect its dominance in Thailand’s gas and oil industry, its strategic importance and function as a policy vehicle for domestic energy security and development, its good management record and its solid cash flow-generating capability. Fitch expects PTT to retain its near monopoly in mid-and-downstream Thai gas operations.
PTT’s gas interests are the main contributor to its operating EBITDAR. Cash flows from these activities have proven relatively stable, thanks to long-term supply and sales agreements with minimum take-or-pay conditions, a cost-plus pricing structure and generally less volatile gas prices (relative to oil prices).
Nevertheless, the company’s credit profile is tempered by its vulnerability to fluctuations in commodity prices, significant budgeted capex, exposure to regulatory and political risks, as well as some foreign exchange risk. Also net debt is expected to increase with a continuing large capex plan. However, in Fitch’s view, PTT’s financial position and liquidity are likely to remain strong, while adjusted net debt/operating EBITDAR leverage is likely to stay at 2.0x or below on a sustained basis.