BAY on creditwatch on potential integration into MUFG
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Standard & Poor's Ratings Services puts the credit ratings of Bank of Ayudhya on CreditWatch, likely to upgrade the Thai bank's ratings following the integration into Mitsubishi UFG Financial Group (MUFG).
S&P now assigns 'BBB-' long-term and 'A-3' short-term counterparty credit ratings on BAY.
"We placed the ratings on CreditWatch to reflect our expectation that BAY could benefit from potential parent group support if Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU) acquires a substantial stake in the bank," said Standard & Poor's credit analyst Ivan Tan.
S&P aims to resolve the CreditWatch within the next six months once BTMU's proposed acquisition and the impact of BAY's merger with BTMU's Thailand operations become clearer.
It may raise the ratings if (1) BTMU acquires a substantial stake in BAY and ascribes high importance to BAY; and (2) BAY's stand-alone credit profile (SACP) does not deteriorate materially.
"Conversely, we could affirm the ratings if we no longer believe that the proposed acquisition is likely to happen, or if BAY's SACP deteriorates substantiality post the merger. We believe such deterioration in SACP is unlikely."
