Bangkok--20 May--Moody
Riots and political instability in Bangkok, Thailand's capital, have no immediate, negative credit impact on Thai corporate issuers, although longer term implications cannot be ruled out.
Whilst the largely domestic operations of all issuers have been affected by the unrest, these have not risen to the point of harming their financial health. This is supported by the fact that no issuer has material short term offshore finance exposure that may cause refinancing risk, if investor confidence is undermined. Protest leaders have surrendered yesterday, however in the event that the riots re-emerge or spread to other parts of the country, thus significantly affecting the Thai economy and its financial markets over a longer period, negative pressures could build for all corporate issuers.
Some comfort is afforded by Thailand's fairly resilient economy towards recent political instability, which has had little impact on the country's longer term economic outlook. Moody's still expects Thailand's GDP to rise by 4.5% in 2010. Given the high degree of correlation between the domestic economy and the companies' own prospects, rating implications are likely to be minimal as long as this resilience is maintained.
Government-related issuers (GRIs) are exposed to Thailand's sovereign ratings and could see their ratings under pressure, should the country's credit profile deteriorate. Currently, Thailand is rated Baa1 with a negative outlook. The only GRI whose rating includes some uplift for government support is PTT Pcl (rated A2, negative). If the Thai government's ability to service its debt weakens, it could dilute the degree of support to PTT and thus impact PTT's rating.
Moody's rates 9 corporate issuers in Thailand. These are Thai Beverage (Baa2 stable), one of the country's largest producers of beer and spirits; True Corp (B2 negative), Thailand's only integrated provider of telecom and media services together with its cellular subsidiary True Move (B2 negative); and PTT (A2 negative), a majority-state-owned energy company with rated subsidiaries, PTT Exploration & Production (A3 negative), Thai Oil (Baa1 stable), PTT Aromatics and Refining (Baa2
negative), PTT Chemical (Baa3 negative), and IRPC (Baa3, negative).