THURSDAY, March 28, 2024
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Moody's affirms PTT's Baa1 ratings

Moody's affirms PTT's Baa1 ratings

Moody's Investors Service has affirmed PTT Public Company Limited's Baa1 issuer and senior unsecured ratings.

At the same time, Moody's has also affirmed PTT's baseline credit assessment (BCA) at baa2. The outlook on all ratings remains stable.
"The affirmation of PTT's Baa1 ratings reflects its strong credit 
metrics, solid liquidity profile and healthy cash flow generation, even after taking into account its proposed US$4.3 billion debt-funded acquisition of Glow Energy Public Company Limited, a power company based in Thailand," said Rachel Chua, a Moody's analyst.
Moody's expects PTT's post-acquisition retained cash flow and adjusted net debt to stay at around 55 per cent and 60 per cent over the next two years, which is healthy relative to the quantitative downward rating guidance of 25 per cent for its rating level. 
Its EBITDA interest coverage will remain strong at 9x-10x.
"We believe this acquisition is in line with PTT's strategy to grow its presence in the Thai power sector such that it more than doubles total power generation capacity to over 5GW. It will also allow the company to leverage on Glow's operational expertise in the sector,” said Chua.
Through its 75 per cent effective stake in Global Power Synergy Public Company Limited (GPSC), PTT announced that it has signed a sales purchase agreement with French utility company Engie (A2 stable) to acquire its 69 per cent stake in Glow Energy Public Company Limited for Bt97.6 billion. 
GPSC will also have to make a tender offer for the remaining 31 per cent stake held by public shareholders at the same price, bringing the cost of acquiring 100 per cent of Glow to $4.3 billion.
"PTT's Baa1 ratings continue to reflect its baa2 BCA and a one-notch uplift resulting from our expectation of a high likelihood of extraordinary support from the Government of Thailand [Baa1 stable]," said Chua.
The baa2 BCA reflects the company's strategically important position as Thailand's national integrated oil and gas company and sole operator in gas transmission and distribution, significant upstream production and control over around 60 per cent of Thailand's total refining capacity, strong and resilient credit metrics through periods of sustained low oil prices given its integrated business model; and strong liquidity profile, with a large cash balance.

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