Bangkok--24 Jan--Fitch Ratings
Fitch Ratings (Thailand) Limited has affirmed KTB Leasing Company Limited’s (KTBL) National Long-Term and Short-Term Ratings at ‘AA-(tha)’ and ‘F1+(tha)’ respectively. The Outlook is Stable.
KEY RATING DRIVERS
The rating reflects Fitch’s view that there is a high probability that KTBL’s sole direct shareholder, Krung Thai Bank Public Company Limited (KTB; AA+(tha)/Stable), would provide extraordinary support to its subsidiary, if required. KTB is the second-largest commercial bank in Thailand by assets, and is also the only commercial bank that is majority owned by the government.
Fitch considers KTBL to be of strategic importance to KTB. KTBL shares KTB’s name and logo, and is KTB’s only wholly owned leasing subsidiary with operations in auto hire purchase, financial leases, and operating leases. The company also relies on borrowings from KTB to support the majority of its funding requirements. Fitch believes KTB has no intention to reduce its stake in KTBL in the foreseeable future.
KTBL’s National Long-Term Rating is notched two levels below KTB’s National Short-Term Rating. This differential reflects a central bank regulation that constrains the amount of financial support that KTB can provide to KTBL. KTB’s aggregate exposures to affiliates outside of its ‘solo consolidation group’ are capped at 25% of its capital funds. KTBL does not qualify as part of KTB’s solo consolidation group due to its operating lease business, and hence KTB’s funding to KTBL faces this limit.
RATING SENSITIVITIES
Given the support-driven ratings of KTBL, any changes in KTB’s ratings would affect the ratings. A significant reduction in KTB’s ownership of the company, or any other signs of reduced importance of KTBL to KTB, would have a negative impact on the company’s ratings.
Meanwhile, any regulatory changes or a restructuring of KTBL that would allow the company to be included in KTB’s solo consolidation group could have a positive impact on the ratings.
The list of rating actions is as follows:
National Long-Term Rating affirmed at ‘AA-(tha)’; Stable Outlook
National Short-Term Rating affirmed at ‘F1+(tha)’