TRIS Rating Co., Ltd. has affirmed the company rating of Bangkok Expressway PLC (BECL) at "A-" with "stable" outlook. The rating reflects the stable cash flow generation resulting from strong demand of traffic in Bangkok, the benefit of being the only toll road system linked to the First Stage Expressway System (FES) to form a comprehensive road network for Bangkok, and the proven track record of BECL's management team. The rating also takes into consideration the company's current debt profile, which is structured to match debt servicing obligations with internal cash generation until debts mature. These strengths are partially offset by high leverage, uncertainty over future government transportation policies, and the government's potential intervention in toll adjustments.
The "stable" outlook reflects the expectation that traffic will remain strong, which will in turn produce adequate debt service coverage from annual revenue for BECL. TRIS Rating expects the company will maintain its conservative policy in future investments and dividend payouts.
TRIS Rating reported that BECL built and operates the elevated Si Rat Expressway (The Second Stage Expressway System or the SES) and its various extensions under 30-year Build-Transfer-Operate (BTO) concessions from the Expressway and Rapid Transit Authority of Thailand (ETA). The SES was constructed as a six-lane elevated expressway for a total length of approximately 38.5 kilometers (km.). The SES is comprised of four sectors linked to the FES, which was constructed and has been operated by the ETA. The roads form a city ring road, with routes to the north, east, southeast and southwest, creating a comprehensive road network for Bangkok residents that provides an alternative to the heavily congested free roads within central Bangkok and the suburbs. In addition, BECL incorporated a subsidiary, Northern Bangkok Expressway Co., Ltd. (NECL), to carry out construction and management of the Udon Ratthaya Expressway (Bang Pa In-Pak Kret Expressway), known as SES Sector C+, for a total length of 32 km. under a 30-year BTO concession with the ETA. BECL currently holds 53.33% of NECL's registered capital.
TRIS Rating said, BECL's financial performance depends on traffic volume, the toll rate, and operating costs. Traffic volume on the expressway has continuously increased during the past few years. Despite the tremendous increase in gasoline prices during 2005, traffic volume on the expressway rose by 2.5% to an average of 905,339 cars per day for the first ten months of 2005 compared with the same period of the previous year. TRIS Rating expects that the continuous growth of the Thai economy, the expansion of residential housing to the areas surrounding the city, and heavy traffic congestion on free roads will continue to support demand for toll road in the future. BECL's operating performance is expected to remain sound due to continued traffic growth, moderate toll rate adjustments and the management team's ability to conservatively manage operating costs.
Being a cash-generating company, BECL had an average daily cash inflow (after sharing with the ETA) of Bt18 million for the first ten months of 2005. The company's indebtedness is a long-term syndicated loan that will fully amortize in 2016, which is in line with its stream of cash generating capacity. The company's outstanding debt as of 30 September 2005 stood at Bt30,609 million. Debt servicing obligations are predictable, as the interest rates are fixed and well-structured to match the company's internal cash generation; however, starting from September 2008, the interest rate on the syndicated will float at MLR-2%. The funds from operations (FFO) to total debt ratio in 2004 was 12.94%, up from 9.13% in 2003. Though BECL's leverage position is quite high, it is mitigated by relatively stable and predictable cash flow generation, said TRIS Rating. -- End
Bangkok Expressway PLC (BECL) Company Rating: Affirmed at A- Rating Outlook: Stable
The "stable" outlook reflects the expectation that traffic will remain strong, which will in turn produce adequate debt service coverage from annual revenue for BECL. TRIS Rating expects the company will maintain its conservative policy in future investments and dividend payouts.
TRIS Rating reported that BECL built and operates the elevated Si Rat Expressway (The Second Stage Expressway System or the SES) and its various extensions under 30-year Build-Transfer-Operate (BTO) concessions from the Expressway and Rapid Transit Authority of Thailand (ETA). The SES was constructed as a six-lane elevated expressway for a total length of approximately 38.5 kilometers (km.). The SES is comprised of four sectors linked to the FES, which was constructed and has been operated by the ETA. The roads form a city ring road, with routes to the north, east, southeast and southwest, creating a comprehensive road network for Bangkok residents that provides an alternative to the heavily congested free roads within central Bangkok and the suburbs. In addition, BECL incorporated a subsidiary, Northern Bangkok Expressway Co., Ltd. (NECL), to carry out construction and management of the Udon Ratthaya Expressway (Bang Pa In-Pak Kret Expressway), known as SES Sector C+, for a total length of 32 km. under a 30-year BTO concession with the ETA. BECL currently holds 53.33% of NECL's registered capital.
TRIS Rating said, BECL's financial performance depends on traffic volume, the toll rate, and operating costs. Traffic volume on the expressway has continuously increased during the past few years. Despite the tremendous increase in gasoline prices during 2005, traffic volume on the expressway rose by 2.5% to an average of 905,339 cars per day for the first ten months of 2005 compared with the same period of the previous year. TRIS Rating expects that the continuous growth of the Thai economy, the expansion of residential housing to the areas surrounding the city, and heavy traffic congestion on free roads will continue to support demand for toll road in the future. BECL's operating performance is expected to remain sound due to continued traffic growth, moderate toll rate adjustments and the management team's ability to conservatively manage operating costs.
Being a cash-generating company, BECL had an average daily cash inflow (after sharing with the ETA) of Bt18 million for the first ten months of 2005. The company's indebtedness is a long-term syndicated loan that will fully amortize in 2016, which is in line with its stream of cash generating capacity. The company's outstanding debt as of 30 September 2005 stood at Bt30,609 million. Debt servicing obligations are predictable, as the interest rates are fixed and well-structured to match the company's internal cash generation; however, starting from September 2008, the interest rate on the syndicated will float at MLR-2%. The funds from operations (FFO) to total debt ratio in 2004 was 12.94%, up from 9.13% in 2003. Though BECL's leverage position is quite high, it is mitigated by relatively stable and predictable cash flow generation, said TRIS Rating. -- End
Bangkok Expressway PLC (BECL) Company Rating: Affirmed at A- Rating Outlook: Stable