TRIS Rating affirms the company rating on Banpu PLC (BANPU) and the ratings on its senior unsecured debentures at ?A+?. TRIS Rating also affirms the rating on BANPU?s proposed issues of up to THB4 billion in subordinated capital debentures (hybrid debentures) and the additional greenshoe portion of up to THB2 billion, announced on 27 February 2020, at ?A-?. The rating outlook remains ?stable?.
At the same time, TRIS Rating assigns the rating of ?A+? to BANPU?s proposed issue of up to THB3 billion in senior unsecured debentures and the additional greenshoe portion of up to THB2 billion. The proceeds from the new debentures will be used for refinancing its existing debts and for its working capital.
The ratings continue to reflect the company?s leading position in the coal industry in the Asia-Pacific region, reliable stream of income from its power business, and strategic move to focus more on green energy. The ratings take into consideration coal price volatility and factor in the slowdown in demand for coal in the long term, driven in part by efforts to reduce emissions worldwide.
RATING OUTLOOK
The ?stable? outlook reflects the expectation of TRIS Rating that BANPU will maintain its leading position in the coal industry. Dividends from the steady power business and greater contribution from the gas business will provide some cushion for the company. We also expect the company?s strong liquidity, underpinned by its financial discipline and prudent cash management, to help it weather the volatile market conditions.
RATING SENSITIVITIES
An upside for BANPU?s ratings is limited over the next 12-18 months, but could occur if the company improved its financial profile significantly or exhibited greater earnings stability. A rating downgrade scenario could emerge if BANPU?s performance materially deviated from our forecast, induced by the coal prices and gas prices falling significantly short of the expected levels. Any additional debt-funded investments, which significantly weaken the capital structure and cash flow protection for an extended period, could also be a factor leading to a rating downgrade.
RELATED CRITERIA
- Rating Methodology ? Corporate, 26 July 2019
- Hybrid Securities Rating Criteria, 12 September 2018
- Key Financial Ratios and Adjustments, 5 September 2018
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Banpu PLC (BANPU)
Company Rating: A+
Issue Ratings:
BANPU214A: THB4,000 million senior unsecured debentures due 2021 A+
BANPU225A: THB3,000 million senior unsecured debentures due 2022 A+
BANPU234A: THB3,500 million senior unsecured debentures due 2023 A+
BANPU247A: THB5,000 million senior unsecured debentures due 2024 A+
BANPU257A: THB2,100 million senior unsecured debentures due 2025 A+
BANPU264A: THB2,000 million senior unsecured debentures due 2026 A+
BANPU274A: THB10,000 million senior unsecured debentures due 2027 A+
BANPU295A: THB10,000 million senior unsecured debentures due 2029 A+
BANPU234B: USD150 million senior unsecured debentures due 2023 A+
BANPU288A: USD50 million senior unsecured debentures due 2028 A+
Up to THB3,000 million senior unsecured debentures and additional greenshoe portion of up to THB2,000 million due within 10 years A+
Up to THB4,000 million subordinated capital debentures (hybrid debentures)
and additional greenshoe portion of up to THB2,000 million A-
Rating Outlook: Stable