Bangkok--22 Mar--Fitch Ratings
Fitch Ratings (Thailand) Limited has today affirmed the ‘F1(tha)’ National Short-term rating of Esso (Thailand) Plc’s (“Esso”) THB8.0 billion bills of exchanges (“B/E”) programme following the recent amendment of covenant which now permits the partial prepayment of inter-company promissory notes (“P/N”) to its parent, Exxon Mobil Corporation (“ExxonMobil”) of the US.
While Esso’s operating cash flows have been strong over the past two years, thanks largely to its improved gross refining margins (“GRM”), the company used excess cash to prepay THB7.9bn of the P/N and THB800 million of bank loans in Q405. At FYE05, the company’s total debt declined to THB62bn from THB68bn at FYE04.
The revised covenant allows the partial prepayment of the P/N, subject to the maintenance of Esso’s inter-company loans to total debt ratio not falling below 70% at any time or below 80% on a yearly average. The amendment provides greater flexibility for Esso and the impact on its credit profile should be limited due to the aforementioned restriction which still mitigates the default risk of the external debt.
The rating reflects a standby credit facility from Exxon Overseas Investment Corporation (“EOIC”), ExxonMobil’s wholly-owned US subsidiary, which fully covers the programme.
CONTACT: Wasant Polcharoen, Lertchai Kochareonrattanakul, Vincent Milton, Bangkok, Tel: +662 655 4755
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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