Fitch gives 'AAA' to upcoming BAY bond issue
FITCH RATINGS (Thailand) has assigned national long-term ratings of "AAA" to Bank of Ayudhya's upcoming issue of senior unsecured bonds.
The bonds will have maturities of two and/or three years, and the total issue size will be up to Bt15 billion. The proceeds of the issue will be used for refinancing and/or general corporate purposes.
BAY’s national long-term rating is driven by Fitch’s view that it is a strategically important subsidiary of the Bank of Tokyo-Mitsubishi UFJ, as it is a key platform for BTMU’s regional ambitions. BTMU holds 76.9 per cent of BAY, after the integration of BAY with BTMU’s Bangkok branch in January, which solidified its status as the fifth-largest commercial bank in Thailand by loans and deposits.
However, a downgrade in BTMU’s long-term issuer default rating could lead to negative rating action on BAY, including on the national long-term ratings, Fitch said.
BAY’s ratings could also be negatively affected if BTMU displays a reduced propensity to support the Thai unit, which, for example, might be seen through a material reduction in shareholding or a reversal of recent integration measures. However, in Fitch’s view, such actions are unlikely, as reflected in the “stable” outlook on the ratings.
In addition, Fitch Ratings has assigned Japan-based Mizuho Bank’s baht-denominated fixed-rate, senior unsecured notes an expected rating of “A-(EXP)”. The proceeds will be used for general operating purposes. The final rating is contingent upon receipt of final documents conforming to information already received.
The rating of the notes is aligned with the long-term issuer default rating (IDR) of Mizuho Bank (MHBK) because they will constitute unsubordinated and unsecured obligations of MHBK, and rank on equal footing with all other unsecured and unsubordinated obligations.
As MHBK is considered a systemically important financial institution in Japan, its long-term IDR is based on sovereign support, in line with the bank’s support rating floor (SRF) of “A-”. This is because the SRF is higher than the bank’s viability rating (VR) of “bbb+”, which in turn reflects the bank’s strong domestic franchise, solid liquidity profile in yen, and sound asset quality.
