Fitch rates PTTGC on wide product range, operating scale
Fitch Ratings (Thailand) has affirmed PTT Global Chemical's national long-term rating at "AA-(tha)" with a stable outlook, national short-term rating at "F1+(tha)" and national long-term rating on its senior unsecured debentures at "AA-(tha)".
PTTGC’s ratings are underpinned by its position as Thailand’s largest fully integrated petrochemical and refining company, Fitch said. The company has a wide product range and benefits from its large operating scale.
Furthermore, PTTGC enjoys competitive feedstock costs, as most of its feedstock for olefins is natural gas, which is available domestically and cheaply relative to alternatives such as naphtha, which is being used by its competitors.
Fitch has raised its expectations for PTTGC’s financial leverage over the short to medium term.
This reflects the weaker outlook of the petrochemical and refining industry and higher feedstock costs pursuant to renegotiation of gas-supply arrangements with PTT with effect from August 1. Fitch expects the petrochemical and refining businesses to remain under pressure for the rest of the year and into 2013 from weaker global economic conditions.
Based on these and the level of committed capital expenditure (Bt70 billion through 2016, including maintenance capex), Fitch now expects PTTGC’s adjusted net debt/operating EBITDAR (earnings before interest, taxes, depreciation, amortisation, and restructuring or rent costs) to be in the range of 1.5 to 2.0 times during the 2012-13 period, compared with below 1.5x previously.
