Bangkok--10 Jan--Moody's
The following release represents Moody's Investors Service's summary credit opinion on the Government of Thailand and includes certain regulatory disclosures regarding its ratings. This release does not constitute any change in Moody's ratings or rating rationale for the Government of Thailand.
Moody's current ratings on Thailand, Government of and its following affiliates are:
Thailand, Government of
Long Term Issuer (domestic and foreign currency) ratings of Baa1
Senior Unsecured (domestic and foreign currency) ratings of Baa1
Senior Unsecured MTN (foreign currency) ratings of (P)Baa1
Senior Unsecured Shelf (foreign currency) ratings of (P)Baa1
Commercial Paper (foreign currency) ratings of P-2
Bank of Thailand
Senior Unsecured (domestic currency) ratings of Baa1
RATINGS RATIONALE
Thailand's Baa1 government ratings reflect medium economic and institutional strength, but receive support from a relatively high level of government financial strength as the post-1997 crisis debt overhang has eased. Vulnerability of the government's balance sheet to external shocks has been reduced by a steady repayment of external debt and accumulation of official foreign exchange reserves. External indicators are considerably stronger than the median values of not only Baa peers but also many A-rated countries.
However, Thailand's government debt relative to government revenue is more elevated than its Baa-rated peers, although the debt trajectory at both the general government and public sector levels was on a steady downward trend prior to the global recession.
Susceptibility to event risk is low, despite deep political polarization.
The intrinsic strength of the Thai financial system is also weaker than the global norm, but was not destabilized from the global financial crisis. Thailand's income level is also lower than its peers, but this is offset by economic diversity, a high level of national savings, and favorable economic growth prospects.
The outlook was changed from negative to stable in October 2010, prompted by the continued robustness of the economic recovery and the post-crisis stabilization of government finances. Despite the lack of a definitive resolution to the underlying tensions between government and anti-government factions, the current administration capably steered the economy through a major external economic shock, as well as a potentially destabilizing domestic political crisis. In 2010, the central government's fiscal position has consolidated largely due to a strong rebound in revenues, while a persistent current account surplus has combined with large capital inflows to result in record levels of foreign exchange reserves.
The foreign currency bond ceiling was also raised to A2 from A3 in October 2010, based on a lower assessment of moratorium risk, taking into account the following factors: the Thai economy's high degree of trade and investment integration into the global system, recent policies aimed at the liberalization of capital outflows, and the government's low reliance on external financing.
The principal methodology used in this rating was Sovereign Bond Ratings published in September 2008. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
Although these credit ratings have been issued in a non-EU country which has not been recognized as endorsable at this date, the credit ratings are deemed "EU qualified by extension" and may still be used by financial institutions for regulatory purposes until 31 January 2012. ESMA may extend the use of credit ratings for regulatory purposes in the European Community for three additional months, until 30 April 2012, if ESMA decides that exceptional circumstances arise that may imply potential market disruption or financial instability. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Information sources used to prepare the rating are the following :
parties involved in the ratings, parties not involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated entity, obligation or credit satisfactory for the purposes of issuing a rating.
Moody's adopts all necessary measures so that the information it uses in assigning a rating is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.
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Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.
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Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it.
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Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.