Bangkok--2 Apr--TRIS Rating TRIS Rating Co., Ltd. has affirmed the company rating of Bangkok Expressway PLC (BECL) and the ratings of BECL’s existing debentures at “A” and “A-”, respectively. The rating outlook remains “stable”. The ratings reflect the proven record of traffic volume on BECL’s expressways, stable cash flow generation, the benefit of being the only toll road system linked to the First Stage Expressway System (FES), and the management’s strong track record. The ratings also take into consideration the company’s current debt profile, which is structured to service its debt through internal cash generation until the debts mature. These strengths are partially offset by high leverage, uncertainty over future government transportation policies, and the government’s potential intervention in toll rate adjustments. The “stable” outlook reflects the expectation that the volume of traffic on the expressways will remain strong, which will in turn produce sufficient debt service coverage from annual revenue. TRIS Rating also expects BECL to maintain the toll roads in good condition which will sustain traffic flows. TRIS Rating reported that BECL built and operates the elevated Si Rat Expressway (The Second Stage Expressway System or the SES) and various extensions under 30-year Build-Transfer-Operate (BTO) concessions from the Expressway Authority of Thailand (EXAT). The SES was constructed as a six-lane elevated expressway with a total length of 38.5 kilometers (km.). The SES comprises four sectors linked to the FES, which was constructed and is operated by the EXAT. The roads form a city ring road, with routes to the north, east, southeast and southwest, creating a comprehensive road network for Bangkok residents that provides an alternative to the heavily congested free roads within central Bangkok and the suburbs. In addition, BECL incorporated a subsidiary, Northern Bangkok Expressway Co., Ltd. (NECL), to carry out construction and management of the Udon Ratthaya Expressway (Bang Pa In-Pak Kret Expressway), known as SES Sector C+, for a total length of 32 km. under a 30-year BTO concession with the EXAT. BECL currently holds 53.33% of NECL’s registered capital. TRIS Rating said, BECL’s financial performance depends on expressway traffic volume, toll rates, and operating costs. Traffic volume on the expressways has continuously increased during the past few years despite the tremendous increase in gasoline prices during 2005-2007. Traffic volume rose by 2.29% in 2005, 3.45% in 2006 and 4.24% in 2007 to an average of 984,616 cars per day, compared with an average of 944,572 cars per day in 2006. TRIS Rating expects that the continuous growth of the Thai economy, the expansion of residential housing into the areas surrounding the city, and heavy traffic congestion on free roads will continue to support demand for toll roads in the future. BECL's operating performance is expected to remain sound due to stable traffic flow, toll rate adjustments even at moderate levels, and the management team’s ability to effectively manage operating costs. BECL reported toll revenue of Bt7,289 million in 2007, up by Bt276 million or 3.94% from the previous year. However, net profit decreased by Bt136 million to Bt1,407 million mainly due to a penalty charge of Bt222 million for prepayment of a portion of its bank loan and higher interest expenses. As set forth in its loan agreement, the borrowing rate for most of BECL’s debt increased up from 4% in 2006 to 5% in 2007. The rate will change from fixed rate to floating rate (MLR-2%) in October 2008. To partially mitigate interest rate risk, the company refinanced part of its existing loan in August 2007. BECL used the proceeds from offering 3-year, 5-year, and 7-year debentures, worth Bt7,500 million at an average interest rate of 4.6%, to prepay part of its bank loans. The refinancing caused a prepayment fee of Bt222 million. With the higher financing cost, the earnings before interest, tax, depreciation and amortization (EBITDA) interest coverage ratio dropped from 4.85 times in 2006 to 3.98 times in 2007. BECL’s outstanding debt as of December 2007 stood at Bt26,600 million, down by Bt1,783 million from the end of 2006. Both the total debt to capitalization ratio and the funds from operations (FFO) to total debt ratio improved, to 62.39% and 15.46% in 2007 from 64.64% and 14.5% in 2006, respectively. Though BECL’s leverage is quite high, it is mitigated by relatively stable and predictable cash flow from established traffic volume, said TRIS Rating.