TRIS Rating Assigns “A-/Stable” Rating to Senior Unsecured Debt Worth Up to Bt4,500 Million of “THANI”

Stocks News Monday May 11, 2020 11:03 —TRIS News Release

TRIS Rating affirms the company rating on Ratchthani Leasing PLC (THANI) and the ratings on THANI’s existing senior unsecured debentures at “A-” with a “stable” outlook. At the same time, TRIS Rating assigns the rating of “A-” to THANI’s proposed issue of up to Bt4.5 billion in senior unsecured debentures due within five years. The proceeds from the new debentures are intended for use in business operations and for debt repayment.

The ratings incorporate a rating enhancement from THANI’s stand-alone rating based on TRIS Rating’s Group Rating Methodology. TRIS Rating views THANI as a strategically important subsidiary of Thanachart Capital PLC (TCAP) which owns a 57.5% stake in THANI as of March 2020. TCAP is rated “A/Stable” by

TRIS Rating. THANI is a major revenue and cash flow contributor for TCAP. We hold the view that TCAP will highly likely maintain its majority shareholding in THANI in the long-run.

The stand-alone rating on THANI reflects the company’s longstanding strong business position in hire purchase loans in its niche markets, mainly commercial trucks and luxury cars. The rating also takes into account improvements in financial performance and asset quality. Despite the potential decline in credit growth, we expect THANI will maintain its market position for the next few years as the slower business volume should be in line with the industry as a whole.

We also anticipate a moderate deterioration in asset quality, with the non-performing loan (NPL) ratio estimated to rise to 5%-6% from 4% currently due to the economic fallout from the COVID-19 outbreak. Nonetheless, we assess the weaker asset quality to have no impact on the company’s overall risk position, which has been underpinned by a prudent credit policy, improved loan collection and adequate loan loss reserves.

THANI’s capital base, measured by risk-adjusted capital ratio (RAC), is relatively strong. The company’s RAC was 15.2% at the end of 2019. We estimate its three-year (2020-2022) average RAC ratio at 17.2%. Combined with earnings capability, which we view as moderate, our overall assessment of capital, leverage and earnings (CLE) is at the adequate level. We apply earnings before tax (EBT) to average risk-weighted assets (ARWA) and return on average assets (ROAA) to measure earnings capability. We expect THANI will maintain its operating performance with a three-year (2020-2022) average ratio of EBT to RWA of 4.2% and ROAA of 3.3%. THANI’s profitability continues to strengthen. Its consolidated net profit rose by 20% to Bt1.96 billion in 2019. The main driver was the lower provision expenses due to a reversal of provisions before the implementation of the TFRS9 accounting standard scheduled for 2020.

TRIS Rating’s concerns over liquidity and refinancing risk due to the risk aversion in the bond market are alleviated by THANI’s ability to access diverse funding sources, including credit facilities from various financial institutions. This is in addition to the on-going credit support from its former shareholder, TBANK.

RATING OUTLOOK

The “stable” outlook is based on TRIS Rating’s expectation that THANI will maintain strong positions in its niche markets and earnings capability. The outlook is also underpinned by our anticipation that the company’s asset quality will be sustained to a large extent, despite the weak credit environment.

RATING SENSITIVITIES

The ratings or outlook could be revised upward if THANI’s stand-alone credit profile improves significantly. This entails materially stronger capital, with the RAC ratio hovering above 25% and EBT/ARWA above 6% for a sustained period. The ratings or outlook could be revised down if the capital position weakens, with the RAC ratio falling below 15% for a protracted period, or asset quality deteriorates substantially to the point of affecting profitability and capital.

Without an improvement in the stand-alone rating, the ratings or outlook could be revised upward if we believe THANI’s importance to TCAP has been elevated to the next level.

RELATED CRITERIA

- Nonbank Financial Institution Methodology, 17 February 2020

- Group Rating Methodology, 10 July 2015

Ratchthani Leasing PLC (THANI)

Company Rating: A-

Issue Ratings:

THANI205A: Bt1,000 million senior unsecured debentures due 2020 A-

THANI206A: Bt2,000 million senior unsecured debentures due 2020 A-

THANI208A: Bt1,500 million senior unsecured debentures due 2020 A-

THANI209B: Bt665 million senior unsecured debentures due 2020 A-

THANI20DA: Bt1,400 million senior unsecured debentures due 2020 A-

THANI20DB: Bt600 million senior unsecured debentures due 2020 A-

THANI20DC: Bt2,500 million senior unsecured debentures due 2020 A-

THANI211A: Bt175 million senior unsecured debentures due 2021 A-

THANI212A: Bt1,800 million senior unsecured debentures due 2021 A-

THANI212D: Bt720 million senior unsecured debentures due 2021 A-

THANI21OA: Bt145 million senior unsecured debentures due 2021 A-

THANI221A: Bt2,070 million senior unsecured debentures due 2022 A-

THANI227A: Bt1,745.2 million senior unsecured debentures due 2022 A-

THANI22OA: Bt1,200 million senior unsecured debentures due 2022 A-

THANI232C: Bt1,000 million senior unsecured debentures due 2023 A-

THANI237A: Bt486.3 million senior unsecured debentures due 2023 A-

THANI247A: Bt593.7 million senior unsecured debentures due 2024 A-

THANI254A: Bt1,000 million senior unsecured debentures due 2025 A-

THANI264A: Bt700 million senior unsecured debentures due 2026 A-

THANI274A: Bt1,300 million senior unsecured debentures due 2027 A-

Up to Bt4,500 million senior unsecured debentures due within 5 years A-

Rating Outlook: Stable

TRIS Rating Co., Ltd./www.trisrating.com
Contact: santaya@trisrating.com, Tel: 0-2098-3000/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand
? Copyright 2020, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution, or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited, without the prior written permission of TRIS Rating Co., Ltd. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information. All methodologies used can be found at
http://www.trisrating.com/en/rating_information/rating_criteria.html.

เว็บไซต์นี้มีการใช้งานคุกกี้ ศึกษารายละเอียดเพิ่มเติมได้ที่ นโยบายความเป็นส่วนตัว และ ข้อตกลงการใช้บริการ รับทราบ