Thai corporate ratings to remain stable, Fitch says
Play
Falling oil prices will squeeze the profitability of energy corporations while rising leverage in the private sector will constrain the performance of banks, according to Fitch Ratings (Thailand).
The ratings of major corporations are likely to remain stable despite the heightened risk, backed by their strong business profiles and ability to adjust investment costs.
While provisioning costs may increase, banks’ ratings should also prove resilient, supported by their sizeable capital buffers and reserves.
Lertchai Kochareonrattanakul, senior director of corporations, yesterday told Fitch’s inaugural semi-annual investor briefing on next year’s trends that the rating outlooks of most large corporations remained stable, supported by strong business positions and relatively solid credit metrics.
Lower oil prices will weaken PTT’s operating cash flows, resulting in higher leverage. However, PTT has the flexibility to reduce its capital expenditures and manage its leverage to be consistent with the current rating.
If PTT’s standalone ratings fall below Thailand’s sovereign rating (“BBB+/Stable”), its ratings would benefit from a one-notch uplift to reflect the implicit support of the state.
Mobile-phone operators are likely to face slow revenue growth and high marketing expenses, but those factors will be offset by lower regulatory costs.
The largest banks – such as Bangkok Bank, Siam Commercial Bank, Kasikornbank and Krungthai Bank – have built up strong buffers of capital and loan loss reserves, which support their financial profiles.
