Bangkok--13 Feb--Fitch Ratings Fitch Ratings (Thailand) Limited has today affirmed PTT Public Company Limited’s (PTT) National Long-term rating at ‘AA+(tha)’ and its National Short-term rating at ‘F1+(tha)’. At the same time, the agency has affirmed the National Long-term rating on PTT’s outstanding senior unsecured and unsubordinated debentures amounting to THB88.2 billion at ‘AA+(tha)’. The Outlook on the ratings remains Stable. The ratings continue to 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 the country’s energy security and development. PTT is very likely to maintain its natural monopoly in gas transmission and distribution (despite the transfer of some assets back to the state) through its established pipeline network and its long-term lease on the gas pipeline that will be transferred back, 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 off-takes and resells virtually all of Thailand’s natural gas, and has the largest market share of LPG and oil sales. Fitch also notes that the ratings are supported by PTT’s majority state ownership and strong support, good management track record, and its solid and stable cash flow generating capability. 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. The agency issued “Ratings of Public-Sector Entities” in February 2007, replacing the previous Public Sector Entity (PSE) rating methodology published in April 2004. Following the latest methodology, the agency classified PTT as a non-dependent PSE due mainly to its lack of explicit written support or guarantee from the government, its low financial links with the government, and its commercial and profit-oriented operations. Nevertheless, the agency assesses the government’s indirect support as moderate to strong, based on the government’s majority ownership and PTT’s strategic importance to Thailand’s public sector. PTT’s credit profile is tempered by its vulnerability to commodity prices fluctuation, significant budgeted capital expenditure, and exposure to regulatory and political risks and some foreign exchange risk. PTT has budgeted THB241bn for its five-year investment plan (2008-2012). With a continuing large capex plan, net debt and leverage are expected to increase but 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. The Stable Outlook reflects Fitch’s expectation that PTT will maintain its very strong market positions, in particular in the gas business, and its financial profile will be kept consistent with the current ratings throughout the industry cycle.