Bangkok--Mar 1--Fitch Ratings
Fitch Ratings (Thailand) has today placed Siam Panich Leasing Public Company Limited’s (“SPL”) ‘BBB+(tha)’ National Long-term rating and ‘F2(tha)’ National Short-term rating on Rating Watch Positive (“RWP”) following Siam Commercial Bank’s (“SCB”) announcement that it plans to make a tender offer to acquire the remaining 62.89% stake in SPL.
At the same time, the agency affirmed SCB’s ratings at National Long-term ‘AA(tha)’ with a Stable Outlook, its National Short-term ‘F1+(tha)’ rating, the ‘F1+(tha)’ rating for its short-term debenture programme and National subordinated debt rating at ‘AA-(tha)’ (AA minus(tha)). Meanwhile, Fitch Ratings, the international rating agency, also affirmed SCB’s Long-term Foreign Currency Issuer Default Rating (“IDR”) at ‘BBB+’ with a Stable Outlook, Short-term Foreign Currency IDR at ‘F2’, foreign currency subordinated debt rating at ‘BBB’, Individual at ‘C’, and Support at ‘2’.
Currently, SCB group holds a 37.1% in SPL. The tender offer period is from 13 March 2006 until 28 April 2006. SCB may cancel its tender offer if the bank holds less than 75% of SPL at the end of the offer period. The tender offer price of THB38 is in line with SPL’s current market price. Depending on the take up rate, the maximum value of the tender offer would total THB5.1 billion. The agency notes that this should not have a significant impact on SCB’s liquidity and capital positions, considering such maximum value is only about 5% of SCB’s liquid assets or about 7% of the bank’s Tier-1 capital at end-2005. If successfully completed, SCB’s majority stake in SPL should have a positive impact on SPL’s credit ratings based on the likelihood of strong operational and financial support from SCB as the majority shareholder.
While SCB has not yet indicated any plan to change SPL’s business plans or policies, the number of SCB’s representatives on SPL’s board of directors and management is likely to increase if the bank gains a controlling stake. Over the past four years, low interest rates, increasing consumer confidence and easier access to consumer credit have underpinned SPL’s strong growth. Although growth may be affected by rising interest rates in the medium-term, Thailand’s relatively low consumer credit penetration, low vehicle ownership and a growing middle class should help support continued growth. In 2005, the contribution from SPL made up less than 2% of SCB’s net income. A majority stake in SPL may help strengthen SCB’s earnings in the medium-term, boost SCB’s retail banking franchise and give the bank greater oversight of SPL’s credit policies and operations.
Contact: Chaiyapat Paitoon, Vincent Milton, Bangkok +662 655 4762/4759; David Marshall, Hong Kong +852 2263 9963.
Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable.
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