Thai Beverage slides in rating
Fitch Ratings (Thailand) Limited has downgraded Thai Beverage Plc’s (ThaiBev) long-term foreign-currency issuer default rating to ‘BBB-’ from ‘BBB', and its national long-term rating to ‘AA(tha)’ from ‘AA+(tha)’.
The ratings have been removed from rating watch negative (RWN), and a stable outlook has been assigned.
ThaiBev's ratings have been downgraded by one notch following the debt-funded acquisition of Vietnam's Saigon Beer - Alcohol - Beverage Corporation (Sabeco) on December 27, 2017. Fitch expects ThaiBev's leverage, defined as FFO adjusted net leverage, to increase to 5.7x by the end of the fiscal year to September 30, 2018, from 1.2x at fisal year 2017. However, leverage should decline to around 4x by FYE20, which will be in line with its 'BBB-' rating.
The stable outlook reflects our expectation that ThaiBev will deleverage, which stems from its ability and willingness to maintain a conservative capital structure after its 2012 acquisition of Fraser and Neave, Limited (F&N). This willingness may be manifested, among other measures, in a lower dividend payout. The ratings also reflect Thaibev's improved business risk profile from the expanded reach in Vietnam's fast-growing beer sector, and the company's leading position in Thailand's spirits market.
