TRIS Rating affirms the rating of ?AAA? on the outstanding guaranteed debentures issued by PTTEP Treasury Center Co., Ltd. (PTTEPTC) with a ?stable? outlook. At the same time, TRIS Rating assigns the rating of ?AAA? to PTTEPTC?s proposed issue of up to THB15 billion in guaranteed debentures. PTTEPTC intends to use the proceeds from the new debentures to refinance its maturing debentures. Both existing and proposed debentures are fully guaranteed by PTT Exploration and Production PLC (PTTEP), its parent company.
PTTEP is rated ?AAA? with a ?stable? outlook by TRIS Rating. Therefore, the issue ratings of PTTEPTC?s guaranteed debentures reflect the creditworthiness of PTTEP as the guarantor of the debentures.
KEY RATING CONSIDERATIONS
Unconditional, irrevocable guarantee
The ratings on PTTEPTC?s guaranteed debentures are equal to the rating on PTTEP. Under the guarantee terms, PTTEP provides an irrevocable and unconditional guarantee to cover all amounts due under the terms of the debentures up to a specified coverage amount, including the principal, any accrued interest, and related expenses. For the existing issues, the guarantee coverage is up to THB16.875 billion (112.5% of face value). For the proposed issue, the guarantee coverage is 112.5% of face value for the debentures with a tenor of up to five years, and 150% of face value for the debentures with a tenor exceeding five years.
The guaranteed debentures are ranked pari-passu with all other present and future unsecured and unsubordinated indebtedness of PTTEP. The guarantee agreement is governed by the laws of the Kingdom of Thailand.
Credit strength of guarantor
PTTEP?s creditworthiness reflects its leading position in the petroleum exploration and production (E&P) industry in Thailand, its low market risk due to the long-term gas sale agreements with PTT PLC (PTT), increasing geographical diversification, low production cost, conservative financial policy, and strong financial profile.
PTTEP is a core subsidiary of PTT. PTT owns 65.3% of the shares of PTTEP. Both PTT and PTTEP are state-owned enterprises under the Thai law.
Being the Treasury Center of PTTEP
PTTEPTC is a subsidiary set up on 27 May 2015 by PTTEP with the objective of functioning as the Treasury Center for PTTEP and its subsidiaries/affiliates. PTTEPTC manages liquidity for the PTTEP Group of companies through cash pooling and intercompany loans. PTTEPTC also sources funding for the group.
RATING OUTLOOK
The ?stable? outlook reflects the creditworthiness of the guarantor, PTTEP. TRIS Rating expects that PTTEP will be able to maintain its leading position in the E&P industry in Thailand and its strong credit profile.
RATING SENSITIVITIES
The ratings on PTTEPTC?s guaranteed debentures may change if the rating on its guarantor changes.
COMPANY OVERVIEW
PTTEPTC was established on 27 May 2015 by PTTEP, to serve as a financial center for PTTEP and its affiliated companies. PTTEP owns, directly and indirectly, all shares of PTTEPTC.
PTTEPTC acts as a financial management company and financial advisor for PTTEP and its affiliates. Its main role is managing the liquidity and funding structure for the group. PTTEPTC?s main source of revenue is interest income from intercompany loans.
RELATED CRITERIA
- Key Financial Ratio and Adjustments for Corporate Issuers, 11 January 2022
- Issue Rating Criteria, 15 June 2021
- Group Rating Methodology, 13 January 2021
- Rating Methodology ? Corporate, 26 July 2019
PTTEP Treasury Center Co., Ltd. (PTTEPTC)
Issue Ratings:
PTTEPT226A: THB15,000 million guaranteed debentures due 2022 AAA
Up to THB15,000 million guaranteed debentures due within 12 years AAA
Rating Outlook: Stable