Bangkok--12 Dec--Fitch Ratings Fitch Ratings (Thailand) Limited has today affirmed Thai Oil Public Company Limited's (TOP) National Long-term rating at 'AA-(tha)' (AA minus (tha)), and its National Short-term rating at 'F1+(tha)'. At the same time, the National Long-term rating on TOP's outstanding senior unsecured and unsubordinated debentures amounting to THB5.5bn has been affirmed at 'AA-(tha)' (AA minus(tha)). The Outlook on the ratings remains Stable. The ratings reflect TOP's strategic importance to PTT Public Company Limited (PTT) as the group's major refinery, and its high operational inter-dependence with PTT, as well as its large scale, highly complex production capacity and cost competitiveness. TOP has maintained strong cost competitiveness relative to its peers in the region. In addition, TOP's forward integration into aromatics and lube base oil production has increased its oil value chain and reduced the refining margin volatility. Meanwhile, its diversification into the power business should help partially offset earnings volatility from the refining business, although this area's EBITDA contribution is relatively small as yet. Fitch also said that the ratings are underpinned by TOP's strong financial position, with low financial leverage and high coverage ratios, and its plan to maintain low leverage in the future. The company's total debt and net debt declined to THB29.7 billion and THB21.6bn, respectively, at end-September 2007. Its last-twelve-month (LTM) funds from operations (FFO) adjusted net leverage and net adjusted debt/LTM EBITDAR improved to 0.9x and 0.9x, respectively, in 9M07, while FFO/fixed charges was 14.0x and EBITDA/gross interest was 16.1x. Fitch expects TOP to maintain a conservative financial leverage with net debt to EBITDA of around 1.0x. TOP's credit profile is tempered by its high vulnerability to oil prices and gross refinery margin (GRM) fluctuations, as well as the cyclicality of the petrochemicals business. TOP is also exposed to supply risk owing to its high dependence on foreign oil supplies. Other credit concerns relate to its high customer concentration and its exposure to both a single production site and a single market, although the customer concentration is partly mitigated by the fact that PTT, the largest offtaker, is the main player in oil marketing and trading in Thailand, and highly rated at 'AA+(tha)'. The Stable Outlook reflects TOP's relatively strong market position, supported by its cost competitiveness and a conservative financial policy. As TOP is highly exposed to the cyclical nature of oil refining and petrochemicals businesses, its ratings could be affected should the company fail to maintain its net debt/EBITDA at around 1.0x on a sustained basis. TOP is the largest single-site and the most complex oil refinery in Thailand with the current nameplate capacity of 225,000 barrels per day, accounting for 22% of the nation's refining capacity. TOP is currently 49.54% owned by PTT, the largest fully integrated oil and gas company in Thailand, with the remaining shares publicly owned.