TRIS Rating affirms the rating of ?AAA? on the guaranteed debentures issued by PTTEP Treasury Center
Co., Ltd. (PTTEPTC) with a ?stable? outlook. The debentures are fully guaranteed by PTT Exploration and Production PLC (PTTEP). PTTEP is rated ?AAA? with a ?stable? outlook by TRIS Rating. The issue rating reflects the creditworthiness of PTTEP as the guarantor of the issued debentures.
KEY RATING CONSIDERATIONS
Unconditional and irrevocable guarantee
The rating on PTTEPTC?s guaranteed debentures is equal to the rating on PTTEP. Under the guarantee terms, PTTEP provides an irrevocable and unconditional guarantee to cover all amounts due under the terms of the debentures up to THB16.875 billion (112.5% of face value), including the principal, plus any accrued interest, and other related expenses.
The guaranteed debentures are ranked pari passu with all other present and future unsecured and unsubordinated indebtedness of PTTEP. The guarantee agreement is governed by the laws of the Kingdom of Thailand.
Credit strength of the guarantor
PTTEP?s creditworthiness reflects its leading position in the petroleum exploration and production (E&P) industry in Thailand, low market risk thanks to the long-term gas sale agreement with PTT PLC (PTT), low cost of production from legacy assets, conservative financial policies, and a strong financial profile.
PTTEP is a core subsidiary of PTT. PTT owns 65.3% of the shares of PTTEP. Both PTT and PTTEP are state-owned enterprises under the Thai law.
Treasury center of PTTEP
PTTEPTC is a subsidiary set up by PTTEP with the objective of functioning as the treasury center for PTTEP and its subsidiaries/affiliates. PTTEPTC manages liquidity for the PTTEP group of companies through cash pooling and intercompany loans. PTTEPTC also sources funding for the group.
RATING OUTLOOK
The ?stable? outlook reflects the creditworthiness of the guarantor, PTTEP. TRIS Rating expects that PTTEP will be able to maintain its leading position in the E&P industry in Thailand and its strong credit profile.
RATING SENSITIVITIES
The rating on PTTEPTC?s guaranteed debentures may change if the rating on its guarantor changes.
COMPANY OVERVIEW
PTTEPTC was established on 27 May 2015 by PTTEP, to serve as a financial center for PTTEP and its affiliated companies. PTTEP owns, directly and indirectly, all of the shares of PTTEPTC.
PTTEPTC acts as a financial management company and financial advisor for PTTEP and its affiliates. Its main role is managing the liquidity and funding structure for the group. PTTEPTC?s main source of revenue is interest income from intercompany loans.
RELATED CRITERIA
- Group Rating Methodology, 13 January 2021
- Rating Methodology ? Corporate, 26 July 2019
- Key Financial Ratios and Adjustments, 5 September 2018
PTTEP Treasury Center Co., Ltd. (PTTEPTC)
Issue Rating:
PTTEPT226A: THB15,000 million guaranteed debentures due 2022 AAA
Rating Outlook: Stable