TRIS Rating affirms the company rating of Bangchak Corporation PLC (BCP) and the ratings of BCP’s existing senior unsecured debentures at “A”. At the same time, TRIS Rating assigns the rating of “A” to BCP’s proposed issue of up to Bt5,000 million in senior unsecured debentures. The proceeds from the new debentures will be used for refinancing, working capital, and business expansion.
The ratings continue to reflect BCP’s long track record in oil refining and marketing businesses, its leading market position in the oil retailing business, and its diversification into green energy businesses. The ratings are partially offset by increasing leverage due to the company’s investment plan for the upgrade of its refinery and the expansion into new businesses.
RATING OUTLOOK
The “stable” outlook reflects the expectation that BCP will retain its strong market position in the marketing segment. The investments in the power projects are expected to generate sustainable streams of cash and will offset the impact from fluctuations in the oil refining and marketing businesses for BCP.
RATING SENSITIVITIES
An upside for BCP’s ratings may occur if the company generates sizable and recurring cash flow from its diversification efforts, while not materially deteriorating its capital structure. A rating downside may occur if BCP’s capital structure significantly deteriorates due to aggressive debt-funded investments or if the company incurs substantial losses from its investments.
RELATED CRITERIA
- Key Financial Ratios and Adjustments, 5 September 2018
- Rating Methodology – Corporate, 31 October 2007
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