Bangkok--30 Nov--Fitch Ratings Fitch Ratings (Thailand) Limited has today assigned National Long-term ratings of ‘AA+(tha)’ to three new tranches of PTT Public Company Limited’s (PTT, rated ‘AA+(tha)’/Stable) 7-year, 10-year and 11-year unsecured and unsubordinated debentures, totaling about THB7.0 billion. The ratings reflect PTT’s dominance in the gas and oil business in Thailand, as well as its strategic importance and function as a policy vehicle for Thailand’s energy security and development. The ratings also take into account the company’s majority state ownership and strong support, good management track record, and its solid and stable cash flow generating capability. PTT enjoys a natural monopoly in gas transmission and distribution through its established pipeline network, helped further by a secure demand via its long-term sales contracts and the high barriers of entry to its capital-intensive business. Through its subsidiary, PTT Exploration and Production (PTTEP), PTT is one of Thailand’s major exploration and production companies, with the country’s largest reserves and second-largest production. PTT also offtakes and resells virtually all of Thailand’s natural gas, and has the largest market share of LPG and oil sales. The gas interests are the main contributor to its EBITDA, and cash flows from this activity have proved 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. PTT reported a consolidated EBITDA of THB112.3bn for the first nine months of 2007, somewhat stable from the same period last year. The increase of EBITDA from its gas business, and oil trading and marketing business, were offset by the decline of EBITDA from its petrochemical business and the de-consolidation of Rayong Refinery Public Company Limited. Meanwhile, the EBITDA from PTTEP was flat year-on-year, and its gas business and PTTEP accounted for 80% of consolidated EBITDA in 9M07. EBITDA margin decreased to 10.5% in 9M07 from 12.0% in 9M06, attributable to higher feedstock costs. Despite this, PTT’s financial position has remained solid, with net adjusted debt to last-twelve-month EBITDAR of 1.1x for 9M07 (0.9x in 2006) and EBITDA interest coverage of 11.2x (10.3x in 2006). The ratings also consider the company’s large budgeted capital expenditure, volatile commodity prices exposure, as well as regulatory and political risks. PTT has budgeted THB210bn for its five-year investment plan (2007-2011), which is currently under review. The investment budget for 2008 to 2012 is likely to increase slightly, mainly due to new gas pipeline projects and project cost revision. With a continuing large capex budget, net debt and leverage are expected to increase moderately. Nevertheless, its financial position and liquidity should remain strong and in line with its financial policy, targeting a net debt/EBITDA ratio of below 2.0x on a consolidated basis. PTT was partially privatised and listed on the Stock Exchange of Thailand in 2001. Thailand’s Ministry of Finance directly holds a 52% stake in PTT and is expected to retain a majority stake for the foreseeable future. PTT is the largest company on the Thai stock market, with a market capitalisation of THB1.2 trillion at end-October 2007. 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. Contacts: Lertchai Kochareonrattanakul, Bangkok, +662 655 4760; Wasant Polcharoen, +662 655 4763; Vincent Milton, Bangkok, +662 655 4759. Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.