Gunkul Engineering’s rating confirmed at “BBB”

TRIS Rating has confirmed its “BBB” rating for Gunkul Engineering PLC (GUNKUL) at the same time as deeming its issue of up to Bt1,265.5 million in senior unsecured debentures at “BBB-“. 
The debentures rating, one notch lower than the company rating, reflects the ratio of the company’s secured debt to total assets higher than a threshold level of 20%, which is under TRIS Rating’s criteria.
TRIS said the proceeds from the new debentures would be used as working capital and for debt repayment. The BBB company rating reflects its long track record of providing electrical equipment to both public sector and private sector clients, experience in developing and operating power projects, and vertical integration.
The ratings also recognize the predictable cash flow GUNKUL receives from the power industry and the encouraging prospects for the renewable energy sector. 
However, the ratings are constrained by the execution risks associated with the power projects and a looming rise in leverage, as the company plans significant investments in the years ahead.