Bangkok--13 Jun--Standard & Poor's Standard & Poor's Ratings Services today affirmed its foreign currency 'BBB+/A-2' and local currency 'A/A-1' sovereign credit ratings on Thailand. The outlook remains stable. "A net external creditor position, prudent fiscal management, and relatively light net government indebtedness support the sovereign credit ratings on Thailand," said Standard & Poor's credit analyst Kim Eng Tan. "On the other hand, heightened political risks and banking sector nonperforming assets are the main weaknesses of the government's creditworthiness." A strong external balance sheet, which is reinforced by consistent current account surpluses, is a key supporting factor for the sovereign credit ratings on Thailand. By the end of 2008, Thailand's external financial assets are expected to outsize external debt by close to 45% of current account receipts. "Fiscal discipline is another key underpinning for Thailand's sovereign creditworthiness," Mr. Tan said. "Successive Thai governments have shown themselves to be prudent in fiscal matters." Heightened political tensions continue to undermine support for the Thai sovereign ratings. It remains unclear if deep divisions within the Thai establishment could be resolved within the political framework. The re-emergence of street protests has raised the possibility of violence. While the likelihood of such an event is small, it can hurt investor confidence. If the recovery in capital spending stalls as a result, economic growth in the next few years could fall from levels in the past five years. The outlook on the credit ratings is stable on expectations that Thailand will avoid serious social unrest despite continuing political tensions. The sovereign ratings could be lowered if political divisions lead to widespread unrest and violence. In this scenario, economic and fiscal indicators would suffer abrupt deteriorations. Political instability would also prolong the weakness of investor confidence and further damage Thailand's economic growth prospects. Conversely, the sovereign ratings could be raised if the impact of political divisions is contained and indicators of credit support continue to improve. These include the sustained revival of investment growth and the continuation of prudent fiscal policies. Complete ratings information is available to subscribers of RatingsDirect, the real-time Web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; select your preferred country or region, then Ratings in the left navigation bar, followed by Credit Ratings Search. Media Contact: David Wargin, New York (1) 212-438-1579 [email protected] Analyst Contacts: KimEng Tan, Singapore (65) 6239-6350 Takahira Ogawa, Singapore (65) 6239-6342