TRIS Rating affirms the company rating on Banpu PLC (BANPU) and the ratings on its outstanding senior unsecured debentures at ?A+? with a ?stable? rating outlook. At the same time, TRIS Rating assigns the rating of ?A+? to BANPU?s proposed issue of up to THB16 billion in senior unsecured debentures. The new issue rating replaces the issue rating previously assigned on 9 June 2021, following BANPU?s request to increase the issue size from up to THB10 billion to up to THB16 billion. The proceeds from the new debentures will be used for refinancing existing debts and for 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.
For the first three months of 2021, the company?s operating revenue was USD742 million, increasing by 12% year-on-year (y-o-y). The higher revenues were mainly due to a higher coal and natural gas price, together with a contribution from Barnett Shale?s assets acquired in the fourth quarter of 2020. BANPU?s earnings before interest, taxes, depreciation, and amortization (EBITDA) also increased by 23% y-o-y to USD266 million for the first three months of 2021. The company?s debt to EBITDA ratio was 7.6 times for the first three months of 2021 improved from 8.6 times in 2020.
As of March 2021, BANPU?s consolidated debt totaled USD5.4 billion. BANPU?s priority debt, consisted of senior unsecured debts owed by BANPU?s subsidiaries, was worth USD949 million. The ratio of priority debt was about 17% at the end of March 2021.
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 expect the company?s financial discipline and prudent cash management should 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, possibly 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
- Issue Rating Criteria, 15 June 2021
- Rating Methodology ? Corporate, 26 July 2019
- Key Financial Ratios and Adjustments, 5 September 2018
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Banpu PLC (BANPU)
Company Rating: A+
Issue Ratings:
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+
BANPU282A: THB2,000 million senior unsecured debentures due 2028 A+
BANPU295A: THB10,000 million senior unsecured debentures due 2029 A+
BANPU312A: THB3,670 million senior unsecured debentures due 2031 A+
BANPU234B: USD150 million senior unsecured debentures due 2023 A+
BANPU288A: USD50 million senior unsecured debentures due 2028 A+
Up to THB16,000 million senior unsecured debentures due within 10 years A+
Rating Outlook: Stable